Chapter 6 - Life Insurance Policy Riders

Question 1

Rider

Answer 1

A change in policy

Question 2

Multiple Indemnity Rider/Accidental Death Rider

Answer 2

Increases the death benefit, if the insured dies as a result of an accident

Double indemnity

The additional benefit is not affected by loans

Question 3

Guaranteed Insurability Rider

Answer 3

Allows the insured to purchase additional amounts of insurance at predetermined times without proving insurability

Additional protection is based upon attained age rates

Choices must be made within a limited period of time or that option is missed

Question 4

Cost of Living Rider

Answer 4

Death benefit increases each year based upon a pre-determined percentage

Question 5

Term Riders

Answer 5

Sold on permanent policies

Allows insured to meet both temporary and permanent needs

Question 6

Long-term Care Rider

Answer 6

Pays monthly

Reduces death benefit and cash value when used

Anything not used will be part of the death benefit

Question 7

Waiver of Premium Rider

Answer 7

Insurer voluntary waives its right to collect the insured’s premiums due to the insured’s disability

Question 8

Payor Benefit Rider

Answer 8

Waives the premium if the payor dies or becomes disabled up until the child reaches an age of maturity

Typically included on juvenile policies

Question 9

Waiver of Cost of Protection

Answer 9

Applies to universal life

Question 10

Accelerated Death Benefit

Answer 10

Allows the insured to collect all or part of the death benefit prior to death, under certain circumstances:
- confinement in a nursing home
- diagnosis of a terminal condition
- diagnosis of a dread disease
- any other reason approved by the insurance commissioner

Question 11

Automatic Premium Loan Rider

Answer 11

An option that can be chosen by the insured at no cost

When the policy comes due and grace period expires without payment, the company borrows from the cash value account to pay the premium