Life Insurance Riders

Question 1

Life insurance riders

Answer 1

Benefit options that tailor a policy to the owner’s needs

Add benefits to a life insurance policy

Question 2

Waiver of premium

Answer 2

Will pay premiums should the policy holder ever become disabled so they will have coverage for duration of policy

Question 3

Waiver of monthly deductions/cost of insurance

Answer 3

Suspends monthly cost of insurance deductions that are made from the cash account instead of waiving premium payment.

Like waiver of premium but for flexible premium policies

Question 4

Disability income rider

Answer 4

Provided the insured with a monthly benefit check if they become disabled

Question 5

Payor benefit rider

Answer 5

Usually in juvenile policies. If person responsible for premiums becomes disabled the rest of the premiums are waived until child is of age

Question 6

Accelerated death benefit rider

Answer 6

An option that allows the policy owner to apply for an advance on the death benefit proceeds while the insured is still alive.

Insured must have limited life expectancy or meet certain criteria

Question 7

When can accelerated death benefit be requested

Answer 7

Terminal illness (death within 24 months)
Serious illness that results in reduced life expectancy
Long term care due to inability to perform certain tasks
Being admitted to hospice
Catastrophic illness requiring extraordinary treatment (organ transplant)

Question 8

Exchange of privilege rider

Answer 8

Changes who the insured is. Often used if businesses own the policy and the insured is a key employee.

Would switch to another key employee.

Question 9

Other (additional) insured term riders

Answer 9

Provide convertible term insurance for a spouse or an immediate family member (spouse or children’s rider)

Family rider covers both the insured’s spouse and children

Question 10

Insured term rider

Answer 10

Added to permanent policy (acts as term insurance but premium is lower)

Limited time for rider

Expires at certain age or number of years

Question 11

Return of premium rider

Answer 11

Increasing term rider. Death benefit always equals total of premiums paid for the rider and the underlying permanent policy.

Death must occur while rider is in force

Question 12

Accidental Death Benefit Rider

Answer 12

Death due to accident

Death must occur within 90 days of accident

Double or triples face value amount

(Illness, disability, self inflicted injury, war, commission of crimes, aviation activity other than comercial flying)

Question 13

Accidental death and dismemberment rider

Answer 13

The principal sum of 100% of death benefit paid if death due to accident within 90 days

Pays benefit if dismemberment occurs (loss of limb, sight or hearing, paralysis)

Dismemberment is the capital sum of 50% of principal sum

For multiple dismemberment claims maximum paid is principal sum

Question 14

Guaranteed insurability rider

Answer 14

Maybe attached to a permanent policy, and allow the owner to purchase additional life insurance at specific intervals in the future without having to show evidence of insurability

Question 15

Cost of living rider

Answer 15

Based on consumer price index

As inflation increases so does death benefit

Premium based on attained age

Without proof of insurability

Question 16

Long term care rider

Answer 16

Advance of death benefits while insured is living

Percentage of face amount each month

May pay for home care, assisted living, etc.

Reduces death benefit upon death

Question 17

The amount of money paid by an accidental death benefit rider if the insured DIES an accident is called… if disabled it’s called

Answer 17

If they die it is the principal sum

If disabled it is capital sum