Types of Riders

Which of the following statements regarding the cost-of-living rider is NOT correct? A. if the face amount is increased through the cost-of-living adjustment, there is typically an increase in the premium B the typical cost-of-living rider is provided through a form of term insurance coverage. C. 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. D. it is not necessary for the insured to demonstrate evidence of insurability to receive the increased coverage provided through a cost-of-living adjustment.

C

with the waiver of premium rider, the insured must be unable to work for certain period. This is called

the waiting period

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. a rider B. a whole life policy C. an option D. an endorsement

A

Which of the following statements regarding a disability income rider is NOT correct? A. the only way to provide disability benefits in a life insurance policy is through a disability income rider. B. a disability income rider is a form of health insurance C. a disability income rider does not provide benefits for partial or temporary disability. D. most disability income riders do not cover disabilities that develop after age 60 or 65.

A

Which of the following types of life insurance riders is NOT based on term life insurance? A. return-of-premium B. waiver of premium C. cost-of-living D. spousal

B (based more on the actuarial principles of disability insurance)

A life insurance policy may pay death benefits before the insured dies for all of the following reasons EXCEPT. A. terminal illness B. catastrophic illness C. eligibility for long-term care D. financial difficulties

D

An accidental death and dismemberment (AD&D) policy rider's principal sum is equal to A. a reimbursement policy B. principal twice C. double consideration D. the death benefit on the base life insurance policy

D

An option whereby additional insurance may be purchased at various times without evidence of insurability is known as A. payor benefit B. constructive delivery C. waiver of premium D. guaranteed insurability

D

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 (typically, allows insured to purchase additional insurance at 3-year intervals between ages 25 & 40)

For a waiver of premium rider to become operative, the insured must be A. totally disabled B. chronically ill C. terminally ill D. partially disabled

A

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? A. use the accelerated death benefit rider B. purchase an inflation protection option C. use the grace period provision D. use the nonforfeiture option

A

Which of the following statements regarding the standard cost-of-living rider used with life insurance policies is NOT correct? A. there is no additional premium required to pay for increases in the death benefit resulting from the ost-of-living rider. B. a cost-of-living rider can involve attaching an increasing term insurance rider to the base policy. C. there is typically a percentage cap on the amount of yearly increase that is available to the policyowner with this rider. D. this rider provides the policyowner with the option to increase the death benefit of her life policy to match an increase in the cost-of-living index.

A

The payor benefit option or rider is typically used with A. family policies B. juvenile policies C. joint life policies D. adjustable life policies

B

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? A. cost-of-living policy B. return-of-premium policy C. Adjusting benefit policy D. guaranteed dividend policy

B

Which of the following riders provides for changes in the benefit payable based on changes in the consumer price index? A. guaranteed insurability rider B. cost-of-living adjustment rider C. payables rider D. social security rider

B

Which of the following statements regarding a spousal rider to a life insurance policy is NOT correct? A. this is a form of other insureds rider. B. this rider usually provides coverage that lasts as long as the coverage that is provided through the base policy. C this rider usually consists of level term life insurance. D. there is a premium for this coverage in addition to the base policy.

B (it is usually level term insurance)

A rider on a whole life policy that adds temporary coverage for a spouse and children is: A. a family income rider B. a family maintenance rider C. a family term rider D. a multiple protection policy

C

If an insured does not exercise the option to increase coverage under a guaranteed insurability rider, what is the result? A the insurer automatically increases the coverage, per the amount stated in the option B. the policy is canceled C. the coverage will not change and the option automatically expires. D. the premiums on the underlying policy are lowered proportionately because no increase in insurance coverage was purchased.

C

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 $25k life policy, which has a waiver of premium clause. If Josie dies now, the insurance company will pay a death benefit of A. $23,300 B. $12,500 C. $25k D. $23,800

C

Sarah owns a life insurance policy with a $50k 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? A. $57k B. $50k C. $54,200 D. $50,700

C

What can an insured add to a permanent insurance policy which will provide additional coverage, yet cost less than purchasing a separate policy? A. other insured rider B. return of premium rider C. term insurance rider D. double indemnity rider

C

Which of the following statements regarding a cost-of-living rider on a life insurance policy is NOT correct? A. a cost-of-living rider seeks to protect against inflation's erosion of life insurance policy values. B. an inflation index determines the amount of inflation adjustment that must be made to the policy up to a maximum percentage increase. C. the cost-of-living adjustment is tied to the gross domestic product (GDP) D. the cost-of-living rider provides increases in insurance without requiring the insured to provide evidence of insurability.

C

the payor benefit typically waives premiums on a juvenile policy if A. the insured child becomes disabled B. the policy is converted before the insured reaches a specified age C. the person who pays the premium dies or becomes disabled before the insured child reaches a certain age D. the insured child dies before reaching a specified age, usually 21 or 25

C

For a beneficiary to receive accidental death benefits, the death of the insured generally must occur within how many days following the accident? A. 60 days B. 45 days C. 30 days D. 90 days

D

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. A. $12,500 B. nothing C. $50k D. $25k

D

Which of the following statements about accelerated benefit provisions is NOT correct? A. they provide for the early payment of part of a policy's face amount if the insured suffers from a terminal illness or injury. B. They are standard in life insurance policies. C. the death benefit, less the accelerated payment, is still payable. D. the insured must be expected to die within 6 months.

D

Jay has a $50k 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? A. $50k B. $0 C. $100k D. $150k

A

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? A. accelerated benefit rider B. steve cannot withdraw any cash value C. policy loan D. policy surrender

A

What are accelerated benefits? A. life insurance death benefits paid before the death of an insured with a terminal illness B. life insurance cash values paid in a lump sum to the beneficiary C. health benefits paid before the expenses are incurred D. health insurance benefits paid in advance to providers of health care services.

A

Which of the following life insurance policy riders will allow insureds to purchase additional insurance at future dates, regardless of their health? A. guaranteed insurability option B. waiver of premium option C. conversion option D. double indemnity option

A

Which of the following statements about accelerated living benefits is NOT correct? A. they are standard in life insurance policies B. the proceeds must be spent on the insured's medical expenses C. they allow access to the policy's face value D. they are provided at no additional cost to the policyowner

B

Which of the following statements regarding accelerated death benefits is NOT correct? A. the inability to perform activities of daily living (eating, dressing, bathing etc.) is considered a qualifying event. B. accelerated death benefit payments are always 100% of the death benefit. C. an insured may request an accelerated death benefit payment if death is expected within 24 months due to terminal illness. D. a written disclosure must be given to the applicant explaining the effect on various aspects of the policy.

B