South Carolina Insurance Practice Exam

In the event of total disability, which provision usually allows the insured to stop paying premiums?

1. Waiver of premium

2. Accelerated death benefit

3. Guaranteed insurability

4. Conversion privilege

The correct answer is: Waiver of premium

The provision that typically allows an insured individual to stop paying premiums in the event of total disability is commonly known as the waiver of premium. This provision is designed to ease the financial burden on individuals who can no longer work due to a disabling condition, ensuring that their insurance coverage remains in force without the need for premium payments during their period of disability. When the waiver of premium is activated, the insurer agrees not to require premium payments for the duration of the total disability, which protects the insured from losing their coverage due to an inability to pay. This is especially important as it provides peace of mind, knowing that critical insurance protection continues even when the individual faces financial challenges due to their health condition. Understanding this provision is crucial, as it plays a vital role in financial planning and risk management for individuals who may face the possibility of disability. In contrast, the other options such as accelerated death benefit pertain to different aspects of policy benefits, such as accessing a portion of life insurance benefits early in case of terminal illness, rather than addressing premiums due to disability.