Quiz: Riders for Disability Protection

Which of the following correctly describes the disability income benefit rider available with life insurance policies? A. It pays a monthly income determined by a formula specified in the policy if the insured becomes disabled, without impacting the policy's cash value or face amount. B. A disability income benefit rider distributes the policy's death benefit in the form of monthly payments if the insured becomes disabled. C. A disability income benefit rider pays a monthly income equal to the policy premium if the insured becomes disabled. D. A disability income benefit rider distributes the policy's cash value in the form of monthly payments if the insured becomes disabled.

A. It pays a monthly income determined by a formula specified in the policy if the insured becomes disabled, without impacting the policy's cash value or face amount. A disability income benefit rider pays a monthly income if the insured becomes disabled. While the benefit may be based on the policy's face amount, it is paid by the insurer and does not impact the policy's cash value or death benefit.

Billy, age 10, is insured under a juvenile life insurance policy purchased by his father, who pays the premiums. Which of the following would ensure that the insurance stays in force if the father dies or becomes disabled? A. payor benefit rider B. waiver of premium rider C. waiver of monthly deductions rider D. disability income benefit rider

A. payor benefit rider A payor benefit rider ensures that the insurance stays in force by waiving the premium payment if the premium payor dies or becomes disabled.

Which of the following explains why a traditional waiver of premium rider does not work with a universal life insurance policy? A. Universal life insurance policies have more administrative expenses than traditional life insurance policies. B. Expense and mortality charges for a universal life policy are unbundled from the premium, whereas for traditional life insurance policies they are bundled into the premium. C. Premium amounts for a universal life policy are flexible, whereas they are fixed for traditional life insurance policies. D. Premium payments can be occasionally missed with a universal life insurance policy, whereas they cannot be skipped with a traditional life insurance policy.

C. Premium amounts for a universal life policy are flexible, whereas they are fixed for traditional life insurance policies. Because universal life premium payments are flexible, there is no defined amount to be waived. Instead, UL and VUL policies most commonly use a waiver of monthly deductions rider.

Why do most insurers require a waiting period of four to six months before the disability income benefit rider begins payments? A. They must meet federal disability waiting period requirements. B. They want to get at least six months of insurance premiums before they pay for the disability. C. They want to control claims by eliminating claims for short-term disabilities. D. They want to eliminate disability income rider claims by letting disabled insureds die before qualifying for benefit payments.

C. They want to control claims by eliminating claims for short-term disabilities. The insurer wants to make sure the insured is totally disabled before beginning payments.