Chapter 5- Riders

Accelerated benefit

A long-term care rider is a type of: The long-term care rider is a type of accelerated benefit, which is used to pay long-term care costs. The long-term care rider may be separate from the life policy, in which case the accelerated benefit does not reduce the death benefit, or may be incorporated into the life insurance policy, thereby reducing the death benefit or policy cash value.

80%

A long-term care rider provides qualifying individuals with funds to pay long-term expenses while the insured is still alive. What is the typical maximum percentage of the death benefit that can be paid by this rider? A long-term care rider can pay up to 80% of the death benefit.

$200,000

Abe has a $200,000 whole life insurance policy with double indemnity from an AD&D rider. If Abe dies from cancer, how much will his beneficiary receive? Abe's death was not caused by an accident, so his beneficiary will only receive the policy's face amount.

Endorsement

Another term that means rider is: Endorsement is synonymous with rider.

The policy face value will be lowered based on the accelerated amount paid.

If an insured opts to use the accelerated death benefit on their life insurance policy, what is the net effect on the face value of the policy? The face value is lowered/adjusted based on the amount paid for the accelerated death benefit.

Payor rider

Jacqueline has purchased life insurance policies for her sons, ages 10 and 14. Which of the following riders can she purchase to waive the premiums on her son's policies if she were to become disabled? The payor rider would waive policy premiums until her sons reach a specified age.

Payor

Of the following life insurance policy riders, which does not alter the amount of the death benefit? The payor rider only waives premiums if the person paying premiums becomes disabled or dies before the insured child reaches age 21, at which point premium payments resume.

A principal sum if the insured loses both arms

The principal sum of a AD&D rider attached to a life insurance policy pays: The accidental death and dismemberment (AD&D) rider pays a principal sum if the insured loses any of the following due to an accident: both hands, both arms, both legs, or vision in both eyes.

Return of cash value

Which life insurance rider pays the policy's cash value? The return of cash value rider allows a whole life policy's cash value to be included in the death benefit.

Exchange privilege rider

Which rider allows the named insured to be changed in a life insurance policy? The exchange privilege rider (substitute insured rider) allows a named insured to be changed.

Universal life

What type of life insurance policy is the waiver of cost of insurance rider used for? The waiver of cost of insurance rider is used for universal life policies. It allows a disabled policyowner to waive the cost of death protection, but does not waive the cost of premium required to build cash value in the policy.

3 to 6 months

How long is the waiting period for the waiver of premium rider in life insurance policies? In most life insurance policies with the waiver of premium rider, the insured must be disabled for 3 to 6 months before the premium will be waived.

a. The insured must have a terminal illness to receive the benefit. b. Confinement in a nursing home sometimes suffices for payments to be made. c. The benefit is not subject to tax.

The accelerated benefit rider is also called a living benefit rider. Which of the following is true about the accelerated benefit rider? Select one: In order for the accelerated benefit rider to pay benefits, the insured must have a terminal illness. Sometimes nursing home confinement also suffices for payments to be made. Because the payments are used to pay medical expenses, the benefit is not taxable. The correct answer is: All of the above

Return of premium

Which of the following riders pays back the premiums paid into a life insurance policy as long as the insured dies within the time as specified in the policy? Return of cash value allows a whole life policy's cash value to be included in the death benefit. The automatic premium loan allows the insured to automatically use cash value to pay an overdue premium. The excess interest provision pertains to a policy's interest rate and the ability of the policy to build excess cash value. Return of premium pays back premiums paid into the policy.

The policy pays because the accident was not war related.

Jack is a fighter pilot in the Air Force and flies F16 jets. There are exclusions in his life insurance policy for death or injury related to war. What happens to the accidental death and dismemberment benefits of his life insurance policy if he loses his vision in both eyes in a car accident while home on leave? The accidental death and dismemberment rider pays for loss of limbs, and also covers loss of vision in both eyes.

Younger siblings of the policyholder

Riders covering additional insureds can be added to life policies. A popular rider is the children's term rider. All of the following can be covered by the children's term rider, EXCEPT: The children's term rider does not apply to younger siblings of the policyholder. Only children of the policyholder can be covered under the children's term rider.

Age, health

The face amount of the substitute insured rider remains the same for a new employee. The premium however, will be refigured. ______ and ________ are both required in order for the premium to be refigured for the new employee. Select one: a. Insurability, face amount b. Age, health c. Sex, marital status d. Policy date, location LH76043 Feedback Your answer is correct The premium will be refigured based on the new insured's age and health. Although insurability and the sex of the insured are also considered, the face amount of the policy, marital status, location and date are not factors used to refigure the premium for that type of rider.

Family term rider

Which life insurance rider covers the insured's spouse and three children in one rider ? The family term rider combines the spouse and children's term rider in one rider.

Payor rider

Which disability income rider is typically attached to a juvenile life insurance policy? The payor rider waives premiums if the premium-payor of a juvenile life policy becomes disabled before the child reaches a certain age.

The amount paid is one half of the face amount of the life insurance policy.

All of the following statements are true about the accidental death benefit (ADB), EXCEPT: The accidental death benefit is a multiple of the policy benefit, usually double or triple.

The juvenile can assume ownership of the policy.

The Guaranteed Insurability Rider, or GIR, allows the insured to buy? The Guaranteed Insurability Rider (GIR) permits the insured to buy additional amounts of life insurance coverage at specific points in time in the future, as specified in the policy, without proof of insurability.

a. Riders meet unique needs of policyholders. b. A rider is an endorsement to a policy. c. Policy benefits can be added to or taken away from policy benefits by a rider.

There are many different riders that can be added to a life insurance policy. Which of the following statements pertain to riders? Riders are used to meet unique needs of individual policyholders and are considered an endorsement to a policy. Depending on the rider, benefits can be added to or taken away from a policy. The correct answer is: All of the above

a. The insured can buy additional life insurance at specific times in the future. b. If the option is not exercised within 90 days of the specific time, the option is forgone. c. The guaranteed insurability rider usually drops off at age 40.

Which of the following statements is true about the guaranteed insurability rider (GIR)? All of the statements are true. The options offer the opportunity to buy additional life insurance at specific times, and if not exercised within 90 days of the specified time, the insured loses the option. The rider usually drops off at age 40. The correct answer is: All of the above

Annuity rider

Which life insurance rider affecting the policy's death benefit protects against the chance of depleting income during prolonged life? An annuity rider can be added onto a life insurance policy. Annuities protect against the chance of depleting income for prolonged life.

Waiver of premium rider

Which life insurance rider allows the policyowner to waive premium payments during a disability, while keeping the policy in force? The waiver of premium rider in a life insurance policy permits the policyowner to waive premium payments during a disability, while keeping the policy in force. Typically, the policy requires that the disability is total and permanent.

The face amount of the policy

Jon's life insurance policy contains a disability income benefit that will pay him a periodic income in the event he becomes disabled. What factor determines the amount of the benefit? The period income is based on the policy's face amount. Neither the frequency of payment nor the cause of disability is pertinent to the amount of the benefit.

$100,000

Julie has been disabled for three years. The insurance company has waived $4,000 worth of premiums on her $100,000 life insurance policy. If Julie dies, how much will her beneficiary receive? Julie's beneficiary will receive the full face amount. The waiver of premium does not affect the face amount.

The juvenile can assume ownership of the policy.

When a juvenile covered by a payor rider reaches the specified age, what happens to the ownership of the policy? When a child covered on a payor rider reaches the specified age, he/she can assume ownership of the policy.

Variable income rider

Of the following, which is not a term rider? Term riders include: spouse, other insured, children, family, return of premium and return of cash value. There is not a variable income rider.

Accelerated benefit rider

Which life insurance rider is also referred to as the living benefit rider and allows the insured to receive a portion of the death benefit prior to death if the insured has a terminal illness? The accelerated benefit rider, also referred to as a living benefit rider, allows the insured to receive a portion of the death benefit prior to death if the insured has a terminal illness.

The return of premium rider pays the total amount of premiums paid into the policy as long as the insured dies within a certain time period specified in the policy.

Which of the following best describes the return of premium rider The return of premium rider pays the total amount of premiums paid into the policy as long as the insured dies within a certain time period specified in the policy.

3 or 6 months

The appropriate rider allows premium payments to be waived in the event of disability. What is the normal waiting period for premiums to be waived? There is usually a waiting period of 3 or 6 months once the policy owner becomes disabled before the first premium will be waived.

Waiver of cost of insurance

Which of the following is not a life insurance rider that affects the policy's death benefit? Life insurance policy riders that affect the death benefit amount include: multiple indemnity (accidental death benefit), accidental death and dismemberment, guaranteed insurability, cost of living, return of premium, return of cash value, term and annuity.

It waives the insured's premiums if the insured is totally disabled before a specified age.

Which of the following explanations best describes the purpose of the waiver of premium provision of a life insurance policy? The waiver of premium provision waives premium payments during a disability, and keeps the policy in force. The disability must be total and permanent. After a certain age (usually 60 or 65), the waiver of premium provision is no longer valid.

There is no deduction from the death benefit.

Accelerated benefits fall into the same category as death benefits. Which of the following is NOT true about the accelerated death benefit? If accelerated benefits are paid, there is a deduction of that amount paid from the death benefit.

The insured in not required to provide proof of insurability when the option is exercised.

Jill and Jessie are debating whether to add certain riders to their life insurance policy. What is the main benefit of the guaranteed insurability rider (GIR) on a policy? The guaranteed insurability rider (GIR) on a policy allows the insured to increase the amount of life insurance at specific times in the future without providing proof of insurability. The policy amount is not related to the GIR. The original policy specified how much additional coverage could be purchased. The options must be exercised within 90 days of the event.

If the insured is totally and permanently disabled

Under what conditions will the waiver of premium rider pay benefits? The waiver of premium rider stipulates that the insured must be totally and permanently disabled in order to pay benefits.

Rider

What is the term for a policy element that adds or takes away coverage? A rider is attached to a policy and either adds or takes away from coverage.

All waived premiums must be repaid if the policyowner recovers from the disability.

All of the following statements are true regarding the waiver of premium rider for a life insurance policy, EXCEPT: The policyowner is not required to pay back the waived premiums if they recover from the disability.

Long-term care rider

Some riders can affect the death benefit of a life insurance policy. Which of the following riders can decrease the death benefit? The long-term care rider can reduce the death benefit if the decrease is incorporated into the life insurance policy. The correct answer is: Long-term care rider

Substitute insurance rider

Sometimes an insurance rider is needed for a non-family member such as a key employee in an organization. Which of the following riders would be used in this circumstance? The substitute insurance rider allows the policy to remain in force when an employee changes jobs or retires and a new employee is substituted on the policy.

The benefit expires when the insured reaches a certain age, usually 65.

The definition of what constitutes accidental death is defined in each policy. The accidental death benefit usually excludes deaths from accidents that occur while committing a crime, non-commercial aviation, and acts of war. How long does the accidental death benefit remain part of the policy? The date that the accidental death benefit expires is stated in the policy, and is usually 65.

Return of premium

Which life insurance rider pays an amount equal to the total premiums paid as long as the insured dies during a certain time period, as stated in the policy? The return of premium rider pays the total amount of premiums paid into the policy as long as the insured dies within a certain time period specified in the policy. The death benefit is comprised of the face amount plus the total premiums paid into the policy.

Temporary waiver of the policy premium

Which of the following best describes the benefit provided by a payor benefit rider? A payor benefit rider provides a temporary waiver of the policy premium if the premium payor dies, until the minor insured reaches the age stated in the policy (usually 18 or 21).

Guaranteed insurability rider

Which rider allows the policyowner to purchase additional amounts of whole life insurance at certain points in the future? The guaranteed insurability rider, or future increase option, allows the policyowner to purchase additional amounts of whole life coverage at certain future dates (i.e., marriage, birth of a child).