UNIT 5 Flashcards
RIDERS
Add benefits to a life insurance policy
WAIVER OF PREMIUM
if a policyholder becomes disabled, the rider will pay premiums so the policyholder can continue to have coverage for the duration of the policy.
The policy holder must be unable to work for a certain period, called a waiting period, before the waiver takes effect. 90-180 days.
The definition of disabled often changes after a period of time to the inability to work at ANY job that fits with the insureds education, training, or experience.
Waiver of premium rider expires between the ages of 60-65, however if the insured becomes permanently disabled before then, the premiums will be waived for life.
WAIVER OF COST OF INSURANCE
Disability premium waiver, for flexible premium policies such as Universal Life suspends the monthly cost of insurance deductions that are made from the cash account instead of waiving the premium payment.
DISABILITY INCOME RIDER
Provides the insured with a monthly benefit check if they become disabled.
Benefit amount is 1% of face amount
PAYOR BENEFIT RIDER
Usually found with juvenile policies. The provision states that if the person responsible for premium , for example the child’s parents, becomes disabled or dies before the child legally becomes an adult, the rest of the premiums are waived until the child reaches a stated age, usually 18 or 21.
ACCELERATED BENEFITS RIDER
Enables the policyowner to apply for an advance on the death benefit proceeds during the lifetime of the insured. The insured must have a limited life expectancy or meet certain medical circumstances in order to be eligible for an advanced payment of all or a portion of a life insurance policy’s death benefit.
OTHER INSURED RIDERS
Provide convertible term insurance for a spouse or an immediate family member of the primary insured. This is also called a spouse rider or children’s rider
EXCHANGE PRIVILAGE RIDER
Also called the substitute insured rider, is used to change the insured to a different person.
This rider is typically used when a business owns the policy and is also the beneficiary and the insured is a key employee.
TERM INSURANCE RIDER
The insured can add term insurance to a permanent insurance policy using this rider. There are 3 riders available;
Level
Decreasing
Increasing
- Limited time for rider
- Expires at certain age or number of years
RETURN OF PREMIUM RIDER
is an increasing term rider; the death benefit always equals the total of the premiums paid for the rider and the underlying permanent policy. The rider does not return the actual premiums but pays an additional term insurance death benefit that equals the amount of premiums paid.
ACCIDENTAL DEATH BENEFIT RIDER
Pays an extra benefit if the insured dies as the result of an accident. This rider is sometimes referred to as a double or triple indemnity because the death benefit is twice or three times the face amount of the policy.
The insured must die within 90 days of the accident.
Does not cover; Illness Disability Self-inflicted War commission of crimes aviation activities other than commercial flight
*usually expires age 60-65
ACCIDENTAL DEATH AND DISMEMEBERMENT
Supplementary coverage that can be added to traditional life insurance policies. Pays an extra benefit if the insured lives after suffering a severe dismemberment.
Dismemberment is 50% of the death benefit, if you lose 2 limbs you get 100% of the death benefit.
PRINCIPAL SUM
IS THE AMOUNT OF THE RIDER AND 100% OF THE DEATH BENEFIT IS PAID UPON ACCIDENTAL DEATH OF THE INSURED.
CAPTIAL SUM
IS THE DISMEMBERMENT BENEFIT AND IS 50% OR 1/2 OF THE PRINCIPAL SUM. DISMEMBERMENT INCLUDES SEVERANCE OF LEGS, ARMS, FEET, OR HANDS LOSS OF SIGHT LOSS OF HEARING PARALYSIS
GUARANTEED INSURABILITY
allows the owner to purchase additional life insurance at specified intervals in the future for certain amounts without having to provide evidence of insurability.
typically between ages 25-40 at 3 year intervals
