South Carolina Insurance Practice Exam

The waiver of premium does NOT include which of the following provisions?

1. Premiums are waived if insured becomes disabled

2. All future premiums are waived upon recovery from disability

3. Waiver applies only during the term of disability

4. Premiums continue to accumulate while waived

The correct answer is: All future premiums are waived upon recovery from disability

In the context of waiver of premium provisions in insurance policies, it is important to understand how these provisions are designed to operate during periods of disability. The waiver of premium typically allows the insured person to avoid paying premiums while they are disabled, but it does not automatically eliminate the requirement to pay these premiums upon recovery. The correct answer states that all future premiums are waived upon recovery from disability. This is inaccurate because when an insured recovers from a disability, the obligation to pay premiums typically resumes. The waiver of premiums applies specifically during the duration of the disability; therefore, once the insured returns to health, they are responsible for future premium payments again. In contrast, the other options correctly reflect standard practices within waiver of premium provisions. The waiver does apply when the insured becomes disabled, which stops the accumulation of premium debt while they are unable to work. It is also limited to the period in which the insured remains disabled; once recovery occurs, the policyholder must adhere to their payment schedule again. Thus, while the insured does not have to pay premiums during their disability, that obligation does not disappear permanently upon recovery, which makes the declaration in option B incorrect.