Waiver, guaranteed-insurability, payor, and accidental-death riders
Question 1 of 40
An insured owns a whole life policy with a waiver of premium rider. She becomes totally disabled as the rider defines that term and remains disabled well past the elimination period. Once the claim is approved, what does the rider do?
The insurer pays the premiums for her while the disability continues, and coverage, cash value growth, and dividend eligibility go on as if premiums were being paid normally
The insurer pays her a monthly income benefit equal to a percentage of her earnings while she is disabled
The insurer waives a portion of the face amount and reduces the premium accordingly
The policy is converted to reduced paid-up insurance and no further benefits accrue
Question 2 of 40
A grandmother buys a juvenile whole life policy on her seven-year-old granddaughter and adds a payor benefit rider. The grandmother dies two years later. What is the effect of the rider?
Premiums on the child's policy are waived until the child reaches the age stated in the rider
The face amount of the child's policy is paid out to the child's beneficiary
The policy is cancelled and the cash value is returned to the grandmother's estate
The child must furnish evidence of insurability to keep the policy in force
Question 3 of 40
A policyowner reaches a scheduled option date under a guaranteed insurability rider and elects to buy the additional coverage. Which statement correctly describes how that purchase works?
The additional coverage is issued at the insured's original issue age, so the premium matches the base policy rate
The insured must submit to a medical exam, but the insurer cannot decline the coverage
The additional coverage is issued at no additional premium because the option was prepaid
The additional coverage is issued with no new evidence of insurability, at a premium based on the insured's attained age
Question 4 of 40
An insured owns a $250,000 whole life policy with an accidental death benefit rider equal to the face amount. He dies of a heart attack at home. What is payable?
$500,000, because the rider doubles any death benefit
$500,000, because death was sudden and unexpected
$250,000, the base face amount only
Nothing, because the accidental death rider excludes death from natural causes
Question 5 of 40
A policyowner surrenders his Texas life policy, which carried waiver of premium, guaranteed insurability, and accidental death riders. What happens to the riders?
They continue as separate contracts until their own stated expiry ages
Only the accidental death rider survives, since it is funded separately
They convert automatically into a term policy of equal value
All three riders terminate, because a rider has no independent existence apart from the base policy
Question 6 of 40
An insured with an accidental death and dismemberment rider loses the sight of one eye in a covered accident. Under the rider's schedule, what is payable?
The principal sum, because loss of sight is always treated as a death-equivalent loss
Nothing, because AD&D riders pay only on death
A capital sum — a stated percentage of the principal sum for a lesser loss
Twice the principal sum, under the double indemnity provision
Question 7 of 40
Which rider's benefit is triggered by the death or total disability of someone other than the insured?
Waiver of premium rider
Payor benefit rider
Guaranteed insurability rider
Accidental death benefit rider
Question 8 of 40
An insured is seriously injured in a car crash and dies from those injuries. The beneficiary claims the accidental death benefit. Which two conditions must be satisfied for the rider to pay?
The insured must have been under age 65 and the policy must have cash value
Death must result from accidental bodily injury independent of all other causes, and must occur within the time limit stated in the rider after the accident
The accident must have occurred in Texas and been reported to law enforcement
The insured must have completed a medical exam and survived the policy's contestable period
Question 9 of 40
An insured with a whole life policy and a waiver of premium rider becomes totally disabled as the rider defines that term and remains disabled past the waiting period. What does the rider actually do?
It pays the insured a monthly disability income equal to the policy premium, which the insured may spend as desired.
It pays the premium on the owner's behalf while the disability continues, so coverage, cash value growth, and dividend eligibility go on as if premiums were being paid normally.
It waives a portion of the face amount equal to the unpaid premiums and keeps the policy in force at the reduced amount.
It converts the policy to extended term insurance for the length of the disability and restores the original policy at recovery.
Question 10 of 40
A 25-year-old bought a policy with a guaranteed insurability rider. At the scheduled option date when he is 34, he has developed diabetes and wants to buy the additional coverage the rider allows. What happens?
The insurer may decline the option because a new medical condition has developed since issue.
He may buy the additional coverage, but at the original age-25 rate for the new amount.
He may buy the additional coverage only after satisfying a new medical exam and any resulting rate class.
He may buy the specified additional amount with no new evidence of insurability, priced at his attained age of 34.
Question 11 of 40
A grandmother owns and pays for a juvenile whole life policy insuring her 6-year-old granddaughter, with a payor benefit rider attached. The grandmother becomes totally disabled. What is the effect?
Premiums on the child's policy are waived until the child reaches the age stated in the rider or the policy matures, and coverage on the child continues.
The policy pays the death benefit early because the person funding the coverage can no longer pay.
Nothing happens, because the rider responds only to the disability of the insured child.
The insurer pays the grandmother a monthly disability income equal to the premium until she recovers.
Question 12 of 40
An insured is injured in a car crash and dies of those injuries 11 months later. The policy carries an accidental death rider requiring that death occur within 90 days of the accident. The beneficiary claims double indemnity. What is payable?
The face amount plus the full accidental death benefit, because the crash was the sole cause of death.
The face amount plus a prorated portion of the accidental death benefit.
Nothing, because death occurred outside the rider's time limit.
The face amount only, because the rider's time limit between accident and death was not met.
Question 13 of 40
A policyowner surrenders a Texas whole life policy that carried waiver of premium, guaranteed insurability, and accidental death riders. What happens to the riders?
All three riders terminate with the base policy, because a rider is an amendment attached to the policy and has no independent existence.
The riders continue as separate policies at the same premium until the insured requests cancellation.
Only the accidental death rider continues, because it is funded by a separate premium.
The riders remain in force for a mandatory 31-day extension before terminating.
Question 14 of 40
An insured with an accidental death and dismemberment rider loses the sight of one eye in an accident. Under the rider's schedule of losses, what is typically payable?
The principal sum, the same amount paid for accidental death.
Twice the principal sum, because dismemberment losses are doubled.
The capital sum, a stated percentage of the principal sum for a lesser loss.
Nothing, because AD&D riders pay only on accidental death.
Question 15 of 40
An insured becomes totally disabled and, because the waiver of premium rider has a waiting period, the owner keeps paying premiums during that period. The claim is then approved. What is the usual result?
Premiums paid during the waiting period are credited to cash value as paid-up additions and no future premiums are waived.
Nothing is refunded and the waiver begins only at the next policy anniversary.
Premiums paid during the waiting period are commonly refunded, and the insurer pays premiums going forward while the disability continues.
The insurer refunds nothing but pays the insured a lump sum equal to one year of premium.
Question 16 of 40
Which statement about these four riders is accurate?
A guaranteed insurability option that is not exercised on its option date automatically rolls forward to the next option date.
A guaranteed insurability option that is not exercised within its stated window is lost.
A waiver of premium rider pays the beneficiary an amount equal to the premiums waived when the insured dies.
An accidental death rider pays its additional benefit whenever death occurs before the insured's stated termination age, regardless of cause.
Question 17 of 40
An insured under a whole life policy with a waiver of premium rider becomes totally disabled as the rider defines that term and remains disabled well past the elimination period. What does the rider do?
It pays the policyowner a monthly disability income benefit equal to the premium, which the owner may spend as he wishes.
It reduces the face amount in proportion to the premiums that are no longer being paid.
It pays the premiums as they come due while the disability continues, so coverage, cash value growth, and dividend eligibility go on as though premiums were being paid.
It places the policy on extended term insurance until the insured recovers.
Question 18 of 40
A grandfather owns a juvenile whole life policy insuring his 6-year-old granddaughter, pays the premiums himself, and added a payor benefit rider. The grandfather becomes totally disabled. What is the effect on the policy?
The policy immediately pays its face amount to the child's parents.
Premiums are waived until the granddaughter reaches the age stated in the rider, and her coverage continues in force.
Premiums are waived only if the granddaughter also becomes totally disabled.
The rider pays nothing, because the insured child is neither dead nor disabled.
Question 19 of 40
Under a guaranteed insurability rider, how is the premium for coverage bought on an option date determined, and what must the insured furnish?
Premium based on the insured's original issue age; a current medical exam is required.
Premium based on the insured's original issue age; no evidence of insurability is required.
Premium based on the insured's attained age; a medical exam is required only if the added amount exceeds the base face amount.
Premium based on the insured's attained age; no new evidence of insurability is required.
Question 20 of 40
An insured owns a $250,000 whole life policy with an accidental death rider equal to the face amount. The insured dies of a heart attack at age 58. How much is payable?
$500,000, because the rider provides double indemnity on any death.
$250,000, the base face amount only.
Nothing, because the death was not caused by accidental bodily injury.
$250,000 plus a capital sum equal to a percentage of the face amount.
Question 21 of 40
Which statement correctly describes how benefits are paid under an accidental death and dismemberment rider?
The capital sum is paid for accidental death, and the principal sum is paid for lesser losses.
Accidental death and the loss of one hand both pay the full principal sum.
Dismemberment losses are payable only if the insured later dies of the same accident within the rider's time limit.
Accidental death or a major loss pays the principal sum, while a lesser loss such as one hand or the sight of one eye pays a capital sum, a stated percentage of the principal sum.
Question 22 of 40
A Texas policyowner surrenders his whole life policy, which carried waiver of premium, guaranteed insurability, and accidental death riders. What happens to the riders?
All three riders end with the base policy, because the policy, the attached riders and endorsements, and the application together make up the entire contract and a rider has no existence apart from the policy.
The accidental death rider automatically continues as a stand-alone accident policy.
The guaranteed insurability rider survives until its next scheduled option date.
All riders stay in force as long as the owner keeps paying the separate rider charges.
Question 23 of 40
Two clients ask about premium-related riders. Ana, age 40, insures herself and wants premiums excused if she becomes totally disabled. Deion pays for a policy insuring his 8-year-old son and wants premiums excused if something happens to him. Which pairing of riders and triggers is correct?
Ana: waiver of premium, triggered by the insured's own total disability; Deion: payor benefit, triggered by the payor's death or total disability.
Both need waiver of premium, since in each case the trigger is the disability of the person insured.
Ana: payor benefit, since she pays her own premium; Deion: waiver of premium, since his son is the insured.
Ana: waiver of premium; Deion: an accidental death rider written on his own life.
Question 24 of 40
On a universal life policy, the benefit that performs the same function as a traditional waiver of premium rider is most commonly called:
Waiver of the face amount
Guaranteed insurability option
Waiver of monthly deduction, also called waiver of cost of insurance
Disability income rider
Question 25 of 40
An insured with a waiver of premium rider becomes totally disabled as the rider defines that term and remains disabled beyond the elimination period. What does the rider actually provide?
A monthly income benefit paid directly to the insured for the duration of the disability
An immediate payout of the policy's face amount, reduced by any outstanding loans
Payment of the policy premiums by the insurer while the disability continues, with coverage and cash value growth continuing normally
A reduction of the face amount in proportion to the premiums the owner can no longer afford
Question 26 of 40
A grandmother owns and pays for a whole life policy insuring her 7-year-old granddaughter, with a payor benefit rider attached. Which event triggers the rider?
The granddaughter is diagnosed with a serious illness before a stated age
The granddaughter reaches the age stated in the rider
The grandmother decides she can no longer afford the premium
The grandmother dies or becomes totally disabled before the granddaughter reaches the age stated in the rider
Question 27 of 40
An owner exercises an option under a guaranteed insurability rider at age 37. How is the premium for the newly purchased coverage determined?
At the insured's attained age, with no evidence of insurability required
At the insured's original issue age, since insurability was locked in when the rider was purchased
At the insured's attained age, but only after a satisfactory medical examination
At whatever rate the insurer's current underwriting classification produces for the insured's health
Question 28 of 40
An insured with a $150,000 policy and an accidental death rider equal to the face amount dies of a heart attack. How much is payable?
$300,000, because the rider doubles any death benefit
$150,000, because death did not result from accidental bodily injury
$300,000, because a sudden and unexpected death is treated as accidental
Nothing, because a heart attack is an excluded cause of death under the rider
Question 29 of 40
A policyowner surrenders her whole life policy for its cash value. It carried a waiver of premium rider, a guaranteed insurability rider, and an accidental death rider. What happens to the riders?
Each rider continues as a separate contract as long as the rider premium is paid
All three riders terminate, because a rider has no existence apart from the base policy to which it is attached
Only the guaranteed insurability rider continues, because it was already paid for through the option dates
The riders convert automatically to term coverage equal to their benefit amounts
Question 30 of 40
Under an accidental death and dismemberment rider, an insured loses the sight of one eye in a covered accident. Which amount applies?
The principal sum, the same amount payable for accidental death
The policy's full face amount plus the principal sum
The capital sum, a stated percentage of the principal sum
The policy's cash surrender value at the date of the accident
Question 31 of 40
On a universal life policy, the disability provision that corresponds to a waiver of premium rider is usually described as a waiver of:
Monthly deduction, sometimes called waiver of cost of insurance
Surrender charges for the duration of the disability
The policy loan interest accruing during the disability
Any evidence of insurability for future increases in specified amount
Question 32 of 40
Two applicants each want premiums excused if illness stops the money from flowing. Applicant A is a 40-year-old insuring himself; Applicant B is a grandfather buying and paying for a policy insuring his 5-year-old grandson. Which pairing of riders is correct?
Applicant A needs a payor benefit rider; Applicant B needs a waiver of premium rider on the child
Both applicants need a payor benefit rider, because in each case the person paying is the one at risk
Both applicants need a guaranteed insurability rider, since each is worried about future health
Applicant A needs a waiver of premium rider; Applicant B needs a payor benefit rider
Question 33 of 40
An insured with a waiver of premium rider becomes totally disabled as the rider defines that term and remains disabled past the elimination period. What does the rider do?
It pays the insured a monthly income equal to the policy premium until the disability ends
It pays the premium for the policyowner while the disability continues, so coverage, cash value growth, and dividend eligibility go on as if premiums were being paid
It reduces the policy's face amount in proportion to the premiums that go unpaid
It converts the policy to a paid-up reduced-amount policy for the length of the disability
Question 34 of 40
A policyowner exercises the second scheduled option under a guaranteed insurability rider. Compared with the first option she exercised five years earlier, the new coverage will:
Cost the same, because the rider locked in the original issue-age rate for every option
Be issued only if she submits satisfactory evidence of insurability
Cost more, because the additional coverage is issued at the insured's attained age
Be issued at a discount, because she has already proved she is a persisting policyowner
Question 35 of 40
A grandmother owns and pays for a whole life policy on her 6-year-old grandson. The policy carries a payor benefit rider. Two years later the grandmother becomes totally disabled. What happens?
Nothing, because the rider responds only if the insured child becomes disabled
The policy pays the grandmother a disability income benefit until she recovers
Premiums on the child's policy are waived until the child reaches the age stated in the rider
Ownership of the policy automatically transfers to the child's parents, who must resume paying premiums
Question 36 of 40
An insured has a $200,000 whole life policy with an accidental death rider providing an additional benefit equal to the face amount. The insured dies of a heart attack. How much is payable?
$400,000, because the rider doubles every death benefit
$200,000, because death did not result from accidental bodily injury
$300,000, a compromise settlement typical of natural-cause claims
Nothing, because natural-cause death is excluded when an accidental death rider is attached
Question 37 of 40
Under an accidental death and dismemberment rider, the benefit paid for a lesser loss such as one hand or the sight of one eye is known as the:
Principal sum
Elimination amount
Attained-age sum
Capital sum
Question 38 of 40
A Texas policyowner surrenders a whole life policy that carried a waiver of premium rider, a guaranteed insurability rider, and an accidental death rider. What is the status of the riders?
They continue as separate contracts as long as the rider premiums are paid
Only the guaranteed insurability rider survives, since it is a purchase right rather than a benefit
They automatically attach to any replacement policy the owner later buys from the same insurer
They all terminate, because a rider is an amendment to the base policy and has no independent existence
Question 39 of 40
Which rider is triggered by the death or total disability of someone other than the insured under the policy?
Payor benefit rider
Waiver of premium rider
Guaranteed insurability rider
Accidental death rider
Question 40 of 40
Which statement about a waiver of premium rider is accurate?
Premiums paid during the waiting period are commonly refunded once the claim is approved, and the rider itself pays no cash benefit to the insured
The rider waives a portion of the face amount rather than the premium once disability begins
On a universal life policy the rider has no counterpart, since UL has no premium to waive
The disability may begin at any age, because the rider has no age limit on the onset of disability