Life & Health Insurance Exam (National Portion)Policy Provisions, Options, and RidersEasy
A life insurance policy includes a Waiver of Premium rider. If the insured becomes totally disabled, what is the typical effect on the policy premiums?
- APremiums are reduced by 50% for the duration of the disability.
- BPremiums are waived after a waiting period, and the policy remains in force.
- CPremiums are paid by the insurer, but the death benefit decreases.
- DPremiums are deferred until the insured recovers, then paid back with interest.
Show answer & explanationAnswer & explanation
Correct answer: B. Premiums are waived after a waiting period, and the policy remains in force.
The Waiver of Premium rider ensures that if the insured becomes totally disabled, premiums are no longer required after a waiting period (typically 3-6 months), and the policy continues as if premiums were being paid.
Why the other options are wrong
- A. Premium reduction is not a feature of the Waiver of Premium rider.
- C. The death benefit does not decrease; the policy continues normally.
- D. Premiums are waived, not deferred and repaid with interest.
Waiver of Premium Rider
A rider in a life insurance policy that waives payment of premiums if the insured becomes totally disabled.
- Requires total disability
- Includes a waiting period (e.g., 6 months)
- Policy remains in force without premium payments
Memory trick: DISABLED, then NO BILL