Life & Health Insurance Exam (National Portion)Life InsuranceMedium
A life insurance policy is issued with an 'accidental death benefit' rider. If the insured dies as a result of a covered accident, how will the death benefit typically be paid?
- AThe rider benefit will reduce the primary death benefit.
- BThe primary death benefit will be paid, and the rider benefit will be paid in addition to it.
- CThe accidental death benefit will be paid out as an annuity over a 10-year period.
- DOnly the accidental death benefit will be paid, replacing the primary death benefit.
Show answer & explanationAnswer & explanation
Correct answer: B. The primary death benefit will be paid, and the rider benefit will be paid in addition to it.
An accidental death benefit rider typically provides an additional amount of insurance (often double or triple the face amount) if the insured's death is due to a covered accident. It is paid in addition to the base policy's death benefit.
Why the other options are wrong
- A. Riders typically add benefits, not reduce existing ones.
- C. While some benefits can be annuitized, this rider's primary function is a lump-sum payment in addition to the base policy.
- D. The rider supplements, it does not replace, the primary death benefit.
Accidental Death Benefit Rider
A rider that pays an additional sum of money if the insured dies as a result of a covered accident, typically doubling or tripling the face amount.
- Paid in addition to the base policy's death benefit.
- Death must be due to a covered accident.
- Often called 'double indemnity' or 'triple indemnity'.
Memory trick: Riders ADD protection, like extra armor on a knight.