South Carolina Insurance Practice Exam

Which type of insurance rider allows for premiums to be waived if the insured becomes disabled?

1. Accidental death rider

2. Waiver of premium rider

3. Guaranteed insurability rider

4. Cost of living rider

The correct answer is: Waiver of premium rider

The waiver of premium rider is specifically designed to allow for premiums to be waived if the insured becomes disabled. This rider is an important feature in life insurance policies as it protects the policyholder's coverage during times when they may be unable to work due to a disability. Essentially, if the insured becomes totally disabled for a defined period, the insurance company will not require premium payments for the duration of the disability, ensuring that the policy remains in force without any financial burden on the insured. This rider adds a significant layer of security, especially for those who rely heavily on their income to maintain their insurance coverage. It provides peace of mind knowing that if a disability occurs, the insured will not lose their life insurance policy due to an inability to pay premiums. In contrast, other riders listed do not serve this particular purpose. For example, an accidental death rider pays an additional benefit if the insured dies due to an accident but does not address premium payments during disabilities. The guaranteed insurability rider allows the insured to purchase additional coverage without providing proof of insurability in the future, and the cost of living rider adjusts the death benefit to keep pace with inflation but does not pertain to premium payments during disability.