Life Insurance Rider
Steve is diagnosed with inoperable cancer and learns that he has only a few months to live. He wants to take an extended vacation with his spouse and needs some immediate funds. He has held a whole life insurance policy for many years. Which of the following options would be the best source of funds, if Steve wants a lump-sum payment?
Accelerated benefit rider
Which of the following statements regarding accelerated death benefits is NOT correct?
Accelerated death benefit payments are always 100% of the death benefit. The inability to perform activities of daily living (eating, dressing, bathing etc.) is considered a qualifying event.
What can an insured add to a permanent insurance policy which will provide additional coverage, yet cost less than purchasing a separate policy?
Term insurance rider
Which of the following statements regarding a cost-of-living rider on a life insurance policy is NOT correct?
The cost-of-living adjustment is tied to the gross domestic product (GDP).
If an insured does not exercise the option to increase coverage under a guaranteed insurability rider, what is the result?
The coverage will not change and the option automatically expires.
Which of the following statements about accelerated benefit provisions is NOT correct?
The insured must be expected to die within 6 months.
Which of the following statements regarding a disability income rider is NOT correct?
The only way to provide disability benefits in a life insurance policy is through a disability income rider.
An option whereby additional insurance may be purchased at various times without evidence of insurability is known as
guaranteed insurability
A life insurance policy may pay death benefits before the insured dies for all of the following reasons EXCEPT
financial difficulties
Josie has been totally disabled for 2 years. During that time, the insurance company has paid all premiums (a total of $1,200) on her $25,000 life policy, which has a waiver of premium clause. If Josie dies now, the insurance company will pay a death benefit of
$25,000
The insured in a $25,000 life insurance policy died of a heart attack. Since the policy had a double indemnity provision, the policy beneficiary received
$25,000
Jay has a $50,000 life insurance policy with an accidental death benefit that pays triple the face amount. If Jay commits suicide 3 years after purchasing the policy, how much will his beneficiary receive?
$50,000
Sarah owns a life insurance policy with a $50,000 face amount and a 10-year return-of-premium rider. She pays an annual premium of $700. If she were to die 6 years after purchasing the policy, what would be the total amount payable to the beneficiary?
$54,200
At the age of 34, Ben purchased a whole life policy with a guaranteed insurability option. How many opportunities will he have to purchase additional life insurance in the future?
2
Which of the following riders provides for changes in the benefit payable based on changes in the Consumer Price Index?
Cost-of-living adjustment rider
Which of the following life insurance policy riders will allow insureds to purchase additional insurance at future dates, regardless of their health?
Guaranteed insurability option
What are accelerated benefits?
Life insurance death benefits paid before the death of an insured with a terminal illness
Which of the following statements about accelerated living benefits is NOT correct?
The proceeds must be spent on the insured's medical expenses.
Which of the following statements regarding the standard cost-of-living rider used with life insurance policies is NOT correct?
There is no additional premium required to pay for increases in the death benefit resulting from the cost-of-living rider.
Which of the following statements regarding a spousal rider to a life insurance policy is NOT correct?
This rider usually provides coverage that lasts as long as the coverage that is provided through the base policy.
How can an insured access all or a portion of a life insurance benefit to pay for a long-term illness or life-threatening disease?
Use the accelerated death benefit rider
Which of the following types of life insurance riders is NOT based on term life insurance?
Waiver of premium
A rider on a whole life policy that adds temporary coverage for a spouse and children is
a family term rider
Because increasing term insurance can be added to permanent policies and, when added, is less expensive than a stand-alone policy, it is almost always sold as
a rider
The payor benefit option or rider is typically used with
juvenile policies
An accidental death and dismemberment (AD&D) policy rider's principal sum is equal to
the death benefit on the base life insurance policy
Which of the following statements regarding the cost-of-living rider is NOT correct?
A drawback of the rider is that a drop in the Consumer Price Index (CPI) can result in a decrease in the coverage previously added.
Upon the insured's death, which of the following policies will pay the face amount of the policy plus a sum equal to all or a portion of the premiums paid?
Return-of-premium policy
For a beneficiary to receive accidental death benefits, the death of the insured generally must occur within how many days following the accident?
90 days
The payor benefit typically waives premiums on a juvenile policy if
the person who pays the premium dies or becomes disabled before
For a waiver of premium rider to become operative, the insured must be
totally disabled