Unit 5: Life Insurance Riders

Question 1

life insurance riders

Answer 1

benefit options to tailor a policy to the owner’s needs

Question 2

waiver of premium

Answer 2

insured and owner are the same person
waives premiums as along as the insured is disabled
insured pays the premium during the waiting period
company pays premiums after waiting period and the premiums paid during waiting period are reimbursed
insured pay premiums with disability ends

Question 3

waiver of cost of insurance (universal life only)

Answer 3

premium paid from cash account
cash account deductions waived
waiting period and standard expiration

Question 4

disability income rider

Answer 4

pays monthly income while the insured is disabled

benefit amount 1% of the face amount

Question 5

payor rider

Answer 5

pays premiums if the adult payor dies or is disabled

requires evidence of insurability (adult)

Question 6

disability riders

Answer 6

waiver of premium
waiver of cost of insurance (universal life)
disability income rider
payor rider

Question 7

accelerated benefits rider

Answer 7

advances part of the death benefit while the insured is still alive

• death is expected within 24 months
• 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 effect on death benefits and other benefits (Medicaid, etc..)

Question 8

Accelerated benefits rider qualifying events

Answer 8

• terminal illness, with death expected within 24 months
• serious illness, such as cancer, which would result in a reduced life expectancy
• LTC due to the inability to perform a number of the activities of daily living
• being admitted to hospice or permanent confinement in a nursing home
• catastrophic illness requiring extraordinary treatments, such as an organ transplant

Question 9

other possible insured riders

Answer 9

spouse
children
family
exchange of insured

Question 10

exchange privilege rider

Answer 10

substitute insured rider

used to change the insured to a different person

Question 11

term rider on the insured

Answer 11

added to the permanent policy
premium lower than a separate policy
limited time for rider
expires at a certain age or number of years

Question 12

return of premium rider

Answer 12

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

Question 13

Accidental Death Benefit (ADB)

Answer 13

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

not payable if death is due to:

• illness
• disability
• self inflicted injury
• war
• crime
• aviation other than commercial flight

Question 14

AD&D

Answer 14

principal sum = 100% of death benefit

• paid if death is due to an accident
• within 90 days of the accident date

pays benefit if dismemberment occurs

• severance of feet, arms, legs, or hands
• loss of sight or hearing
• paralysis

dismemberment is the capital sum = 50% of the principal sum

for multiple dismemberment claims, the maximum paid is the principal sum

Question 15

guaranteed insurability rider

Answer 15

add life insurance up to a specified amount

• certain ages (16-40)
• life events (marriage, birth, or adoption of a child) GROUP LIFE ONLY

no medical questions asked
cost based on insured’s attained age

Question 16

cost of living rider

Answer 16

extra coverage to keep up with inflation
premium based on attained age
without proof of insurability

Question 17

riders affecting amount of death benefit

Answer 17

insured term rider
return of premium rider
accidental death rider
AD&D rider
guaranteed insurability rider
cost of living rider

Question 18

LTC Rider

Answer 18

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