Unit 5

Question 1

Disability Riders

Answer 1

• Waiver of premium
• Waiver of cost of insurance
• Disability income rider
• Payor rider

Question 2

Rider

Answer 2

an add-on or additional provision to a standard insurance policy that provides extra benefits or modifies the coverage.

Question 3

Waiver of Premium rider

Answer 3

• written if the insured and owner are same person.
• waives future premium payments as long as the insured is disabled.
• has a waiting period – insured pays premium
  during this time even though disabled.
• company will pay future premiums after waiting period.
• will reimburse insured for premiums paid during waiting period.
• once no longer disabled, insured pays future premiums.

Question 4

Waiver of cost of insurance (universal life) rider

Answer 4

• deductions from the cash account are waived.
• has a waiting period.

Question 5

Disability income rider

Answer 5

• pays insured a monthly income while disabled.
• X dollars per month per $1,000 face amount.

Question 6

Payor Rider

Answer 6

• pays the premium of a juvenile policy if the adult premium payor: dies/disabled.
• may require the adult to provide evidence of insurability.

Question 7

Other Insured Riders

Answer 7

• spouse
• children
• family
• exchange of insured

Question 8

Riders affecting amount of death benefit

Answer 8

• insured term rider
• return of premium rider
• accidental death rider
• accidental death or dismemberment rider
• guaranteed insurability rider

Question 9

Insured term rider

Answer 9

• added to a permanent policy.
• premium lower than if bought as separate policy.
• rider is for limited time.

Question 10

Return of premium rider

Answer 10

• increasing term insurance rider.
• amount of rider equal to all premiums paid.
• death must occur while rider is in force.

Question 11

Accidental death rider

Answer 11

• death due to an accident.
• death must occur within 90 days of accident.
• doubles or triples the face amount.

Question 12

Accidental death or dismemberment rider

Answer 12

Amount of the rider is the principal sum (100%)
- paid in addition to face amount if death due to accident.
- death must occur within 90 days of accident date.

Also pays a living benefit if dismemberment occurs
- severance of feet, arms, legs, or hands
- loss of sight or hearing
- paralysis

Dismemberment benefit is called the capital sum - usually a percentage of the principal sum (50%).

If multiple dismemberment claims while insured is alive, the principal sum is the maximum paid for all claims combined.

Question 13

Guaranteed insurability rider

Answer 13

Allows additional insurance up to the amount of the rider to be added
- certain ages - usually no older than 40.
- life events - marriage, birth of child, or adoption.
- no medical questions asked.
- cost of additional insurance based on the insured’s attained (current) age.

Question 14

Accelerated benefits rider

Answer 14

• advances part of the death benefit while insured is still alive
  
  • death expected within 24 hours.
  • permanent confinement in a nursing home due
    to a chronic illness or catastrophic injury.
• reduces death benefit payable to beneficiary upon
  death of the insured.
• disclosure by company of affect on death benefits and other benefits (Medicaid etc.)

Question 15

Long term care rider

Answer 15

• advance of the death benefits while insured is
  living.
• stated percentage of the face amount each month
  
  • nursing home
  • nursing/assisted living care
• may pay for
  
  • home care
  • assisted living
  • nursing home care
• reduces the death benefit payable upon death.

Question 16

Cost of Living rider

Answer 16

allows the death benefit to increase over time to keep up with inflation.