South Carolina Insurance Practice Exam

Which rider allows for premium waiving on a child’s life policy if the paying parent dies?

1. Accelerated death benefit

2. Payor benefit

3. Conversion rider

4. Waiver of premium rider

The correct answer is: Payor benefit

The rider that allows for the waiving of premiums on a child's life policy if the paying parent dies is the payor benefit. This specifically designed rider ensures that if the parent or guardian who is responsible for the premium payments passes away, the premium payments for the child’s policy will be waived, allowing coverage to continue without financial burden on the surviving family members. The payor benefit is particularly important in family life insurance planning, as it ensures that the child remains protected even during difficult financial times following the loss of a parent. This rider is tailored to address the unique scenario of child coverage, providing peace of mind to parents that their child’s policy will not lapse due to unforeseen circumstances. Other options, while related to life insurance, serve different purposes. The accelerated death benefit allows an insured person to receive a portion of their death benefit while still alive if they are diagnosed with a terminal illness. The conversion rider provides the policyholder the option to convert a term life insurance policy into a permanent one without undergoing additional medical underwriting. The waiver of premium rider generally waives the premiums for the policyholder in the event of their disability, rather than focusing on the financial impact of a parent's death on a child's policy.