Unit 5 Life Insurance Riders

Question 1

Life insurance is not a one size fits all solution, ____ are benefit options to tailor a policy to the owner’s needs. This will increase the premium on the policy.

Agents/producers must follow the “____” rule by understanding the customer’s current situation and budget and then recommending the most appropriate solutions.

Answer 1

Life insurance riders

Know your customer

Question 2

This is one of the most common types of life insurance riders. If the policyholder becomes disabled, the ____ rider will pay the premiums so the policyholder can continue to have coverage for the duration of the policy. The policy stays in force during the period of disability, and scheduled policy cash values ____.

Answer 2

Waiver of premium rider

Continue to be credited

Question 3

Waiver of premium rider: the insured must be unable to work for a certain period, called the ____ period, before the waiver takes effect. This period is usually ____ to ____ days. If the insured is still disabled at the end of the waiting period, the company ____ any premiums paid during this period.

Answer 3

Waiting period

90 to 180 days

Retroactively refunds

Question 4

The waiver of premium rider is available during the insured’s working years and expires between the ages of ____ and ____. However, if an insured becomes permanently disabled before that age, premiums will continue to be waived for life.

Answer 4

60 and 65

Question 5

The ____ 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. For this reason, this is called waiver of monthly deductions or waiver of ____.

Answer 5

Disability premium waiver for flexible premium policies

Waiver of cost of insurance

Question 6

True or false: A flexible premium policy cannot lapse while the waiver of monthly deductions benefit is in effect and cash values continue to grow with the interest that is credited monthly.

Answer 6

True

Question 7

Disability waiver for flexible premium policies also has a ____ to ____ day waiting period and expires between the ages of 60 and 65.

Answer 7

90 to 180 days

Question 8

The ____ rider provides the insured with a monthly benefit check if they become disabled.

The benefit amount is typically based on the life insurance policy death benefit and an industry-standard is ____% of the face value. The length of time that income payments will continue depends on the definition of disability in the policy.

Answer 8

Disability income rider

1%

Question 9

The ____ rider is usually found with juvenile policies. This provision states that if the person responsible for the premiums, 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 ____ or ____. Since this rider adds insurance on the payor (the adult), medical underwriting may be required.

Answer 9

Payor benefit rider

18 or 21

Question 10

An ____ rider is a standard coverage added to a life insurance policy that 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.

Answer 10

Accelerated benefits rider

Question 11

Accelerated Death Benefit - Qualifying Events:

1. Terminal illness, with death expected within ____ months.
2. Serious illness, such as ____, which would result in a reduced life expectancy
3. ____ due to the inability to perform a number of the activities of daily living
4. Being admitted to ____ or permanent confinement in a ____
5. Catastrophic illnesses requiring extraordinary treatment, such as an ____.

Answer 11

1. 24 months
2. Cancer
3. Long-term care
4. Hospice, nursing home
5. Organ transplant

Question 12

Accelerated death benefit payments range from ____% to ____% of the death benefit. The payment depends on the policy’s face value, the terms of the contract, and the state or residence. The amount of the accelerated payment will be reduced by any ____ against the policy and the death benefit is reduced by the amount of the accelerated payment.

Answer 12

25% to 100%

Outstanding loans

Question 13

A ____ including, but not limited to, a brief description of the accelerated benefit and definitions of the conditions or occurrences triggering payment of the benefits shall be given to the applicant.

The description shall include an explanation of any effect of the payment of a benefit on the policy’s cash value, accumulation account, death benefit, policy loans, and policy liens.

Answer 13

Written disclosure

Question 14

Other (additional) insured riders provide convertible term insurance for a spouse or an immediate family member of the primary insured. This rider is called a ____ rider or a ____ rider.

A ____ rider covers both the insured’s spouse and children. Other insured riders can also be bought for certain non-family individuals such as business associates. The term insurance coverage provided by the other (additional) insured rider is often ____ to permanent coverage during the effective period of the rider.

Answer 14

Spouse or children’s rider

Family rider

Convertible

Question 15

The ____ rider also called the ____ 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. This rider switches the insured to another employee if the key employee retires or leaves the company. The policy’s face amount stays the same and the ____ are adjusted based on the new insured’s age and other rating factors. The new insured is required to provide proof of insurability (submit to a medical examination)

Answer 15

Exchange privilege rider

Substitute insured rider

Premiums

Question 16

The insured can add term insurance to a permanent insurance policy using the ____ rider. It provides coverage similar to a term insurance policy however the premium is ____.

Answer 16

Term insurance rider

Lower than purchasing a separate policy

Question 17

There are three term insurance riders available:

1. ____
2. ____
3. ____

The term rider expires at a specified age or after a certain number of years. The premium for the rider is paid while it’s in force.

Answer 17

1. level
2. decreasing
3. inccreasing

Question 18

The ____ rider is an increasing term rider; the death benefit always equals the total of premiums paid for the rider and the underlying permanent policy. The rider does not return the actual premiums but pays and additional term insurance death benefit that ____ the amount of premiums paid. Term riders have a limited duration and expire at a specified age or after a specified number of years. Death must occur while rider is in force.

Answer 18

Return of premium rider

Equal

Question 19

The ____ rider pays an extra benefit if the insured dies as a result of an accident. This rider is sometimes referred to as ____ indemnity because the death benefit is twice or three times the face amount of the policy.

Answer 19

Accidental death benefit (ADB) rider

Double or triple indemnity

Question 20

Accidental death benefit (ADB) rider - for the extra benefit to be payable, the insured must die within ____ days of an accident. The extra benefit is only payable if the insured’s death was the result of an accident. This rider usually expires when the insured reaches age ____ or ____.

Answer 20

90 days

60 or 65

Question 21

Accidental death benefit (ADB) rider does not cover cause of death resulting from: (6)

Answer 21

1. illness
2. disability
3. self-inflicted injury
4. war
5. commission of crimes
6. aviation activities other than on a commercial flight

Question 22

____ is supplementary coverage that can be added to traditional life insurance policies. In addition to paying an extra benefit if the insured dies as the result of an accident, this rider also pays an extra benefit if the insured lives after suffering a severe dismemberment. This rider has a stated amount of coverage.

Answer 22

Accidental Death and Dismemberment (AD&D) Rider

Question 23

Accidental Death and Dismemberment (AD&D) Rider - If a policyholder dies as a direct result of an accident, a full death benefit will be paid out to the policy’s beneficiary. If the policy is for $100k, the benefit will be ____. If the policyholder does not die as a result of the accident and instead loses a limb, the will receive a ____% benefit payout. Losing two or more limbs would compound for a full benefit payment.

The ____ is the amount of the rider and 100% of the death benefit is paid upon accidental death of the insured.

The ____ is the dismemberment benefit and it 50% or 1/2 of the principal sum.

Answer 23

$100k

50%

Principal sum

Capital sum

Question 24

Dismemberment includes: (4)

Answer 24

1. Severance of legs, arms, feet, or hands
2. Loss of sight
3. Loss of hearing
4. Paralysis

Question 25

The Guaranteed Insurability Rider (GIR) - also called a ____ or a ____ - may be attached to a permanent life insurance policy and allows the owner to purchase additional life insurance at specified intervals in the future for certain amounts without having to provide evidence of insurability. Options to purchase may be exercised typically between ages 25 and ____ at ____-year intervals. The insurance is available at standard rates and must be exercised within ____ days of the listed option date.

Answer 25

Guaranteed-insurability option (GIO)

Guaranteed-insurability benefit (GIB)

40

3-year intervals

90 days

Question 26

Guaranteed Insurability Rider (GIR) - when this rider is added to a policy, the current age of the insured determines the number of options available to purchase additional insurance. Example: at age ____, the insured would have five options available at ages 28, 31, 34, 37, and 40. A 34-year-old insured would have only ____ options available.

The insured may advance the next option date due to a life event (defined as ____, ____, or ____)

Answer 26

25

two options

Marriage, birth, or adoption

Question 27

The ____ rider is based on the Consumer Price Index (CPI). As inflation increases, so does the death benefit of the policy. For example, if an insured had a 100k policy and the CPI increased by 2%, at the end of the year, the insured’s death benefit would increase to $____. The premium for the additional coverage would be based on the insured’s ____ age. If the CPI decreases, the insureds coverage ____.

Answer 27

Cost of living rider

102k

Attained age

Is not reduced

Question 28

There are two approaches to the Long-Term Care Rider concept. The ____ approach recognizes the LTC benefit as separate from the life policy because the benefits paid to the insured will not affect the life policy’s face amount or cash value.

The ____ approach links the LTC benefits paid to the life policy’s face amount and/or cash value. Similar to the accelerated benefits rider, the LTC rider may be used to pay for qualified services such as home care, assisted living, or nursing home care.

Answer 28

Independent approach

Integrated approach