Unit 5: Life Insurance Riders

Tammy has a $100,000 life insurance policy with a double indemnity rider. Tammy is killed in an automobile accident. How much will the policy pay?

$200,000

What are accelerated benefits?

Life insurance death benefits paid before the death of an insured with a terminal illness

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 three 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 six 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

Allison has a guaranteed insurability rider attached to her permanent policy. Which of the specified intervals can she purchase additional life insurance without having to provide evidence of insurability?

3-year intervals

For an accidental death benefit rider to be payable the insured must die (due to injury from the accident) within how many days of the accident?

90

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

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

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 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)

All of the following events would qualify to receive an accelerated death benefit payment EXCEPT

a disability

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-along policy, increasing term insurance is almost always sold as

a rider

Which of the following terms describes something that is used to add benefits to a life insurance policy and customize the coverage to an insurer's particular needs?

a 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 wife 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

All of the following are disability riders EXCEPT

accelerated benefits rider

Which of the following riders allow insureds who are terminally ill to obtain benefits from insurance policies prior to their death

accelerated benefits rider

Which of the following statements regarding accelerated death benefits is NOT corrrect?

accelerated death benefit payments are always 100% of the death benefit

Which of the following causes of death is NOT excluded from coverage under the accidental death benefit rider?

an accident

A family rider covers

both the insured's spouse and children

The amount of money paid by an accidental death and dismemberment rider if the insured is disabled in an accident if referred to as

capital sum

Which rider lets insureds buy additional coverage without proof of insurability in order to keep pace with inflation?

cost of living

Kumar has a life insurance policy with a rider that will pay him $1,000 per month if he is totally and permanently disabled. Which type of rider does he have?

disability income rider

All of the following statements about the disability income rider are correct EXCEPT

during the time that premiums are waived, the policy is not in force

A life insurance policy may pay death benefits before the insured dies for all of the following reasons EXCEPT

financial difficulties

An option whereby additional insurance may be purchased at various times without evidence of insurability is known as

guaranteed insurability

Which of the following is a guarantee that at specified ages, dates, or events, the insured may buy additional insurance without a medical exam?

guaranteed insurability

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

The payor benefit option or rider is typically used with

juvenile policies

Which of the following riders allows for an advance of the death benefit if the insured is confined to a nursing home or cannot perform the activities of daily living

long-term care rider

Paul has a life insurance policy on his son for which he pays all the premiums. A rider to this policy states that if Paul becomes permanently and totally disabled, the premiums will be paid until his son reaches age 21, at which point his son will take over the premium payments. Which type of rider does he have?

payor rider

All of the following are possible options for term insurance riders EXCEPT

permanent

The amount of money paid by an accidental death benefit rider if the insured dies in an accident is referred to as the

principal sum

Which of the following riders is increasing term insurance that always equals the total premiums paid during the time the policy is in effect?

return of premium

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

What can an insured add to a permanent insurance policy which will provide additional coverage, yet cost less than a purchasing a separate policy?

term insurance rider

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

On an Accidental Death and Dismemberment (AD&D) policy rider's principal sum is equal to

the death benefit on the base life insurance policy

All of the following are riders that affect that amount of a death benefit EXCEPT

the disability income rider

In which of the following situations would an accelerated death and dismemberment (AD&D) policy most likely NOT pay a benefit?

the insured injures a finger while using a chainsaw in his workshop

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

The payor benefit typically waived premiums on a juvenile policy if

the person who pays the premium dies for becomes disabled before the insured child reaches a certain age

Which of the following statements about accelerated living benefits is NOT correct?

the proceeds must be spend on the insured's medical expenses

With the wavier of premium rider, the insured must be unable to work for a certain period. This is called

the waiting period

Which of the following statements regarding the standard cost-of-living rider used with the 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

For a waiver of premium rider to become operative, the insured must be

total disabled

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 is waiver of all future premiums in the event of total and permanent disability?

waiver of premium

Which of the following types of life insurance riders is NOT based on term life insurance?

waiver of premium

Alberta is concerned that if she became totally and permanently disabled, she would not be able to pay her life insurance premiums and the policy will lapse. Which type of rider should she consider to protect against this possibility?

waiver of premium rider

All of the following statements about the waiver of premium rider are true EXCEPT

with the waiver of premium rider, premiums are reduced by 80% during any period that the insured is disabled