Unit 5 Life Insurance Riders

Question 1

life insurance rider

Answer 1

benefit options to tailor a policy to the owner’s needs. add benefits to a life insurance policy

Question 2

waiver of premium

Answer 2

insured an owner are the same person
waives premiums as long as the insured is disabled
insured pays premium during the waiting period (90-180 days of injury)
company pays premiums after the waiting period
premiums paid during waiting period reimbursed
insured pays premiums when disability ends

Question 3

waiver of cost insurance

Answer 3

found in flexible premium policies, such as universal life
cash account deductions waived
waiting period
premium paid from cash account

Question 4

disability income waiver

Answer 4

pays monthly income while disabled
benefit amount of 1% of face amount

Question 5

payor rider

Answer 5

pays premiums of juvenile policy if the adult payor dies or is disabled
requires evidence of insurability (adult)

Question 6

4 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 insured is still alive and the 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

Question 8

other insured riders

Answer 8

-spouse
-children
-family
exchange of insured (employee changed to another employee)

Question 9

insured term rider

Answer 9

-added to a permanent policy
-premium lower than a separate policy
-limited time for rider
-expires at a certain age or number of years
-3 available: level, decreasing, increasing

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 benefit

Answer 11

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

Question 12

accidental death or dismemberment rider

Answer 12

the principal sum 100% of death benefit
-paid if death due to accident
-within 90 days of 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 maximum paid is principal sum

Question 13

guaranteed insurability rider

Answer 13

add life insurance up to a specified amount
-certain ages (between 25 and 40)
-life events (marriage, birth, adoption, etc.) for group insurance
-no medical questions asked
-cost based on the insured’s attained age

Question 14

cost of living rider

Answer 14

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

Question 15

6 riders affecting amount of death benefit

Answer 15

-insured term rider
-return of premium rider
-accidental death rider
-accidental death or dismemberment rider
-guaranteed insurability rider
-cost of living rider

Question 16

long term care rider

Answer 16

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