What does a premium waiver rider in a life insurance policy do?

What does a premium waiver rider in a life insurance policy do?

• A. Increases premium payments in times of hardship
• B. Allows cancellation of the policy without penalty
• C. Waives premiums if the policyholder becomes disabled
• D. Provides a loan against the policy’s cash value

Answer: (C)

A premium waiver rider in a life insurance policy is designed to protect the policyholder by ensuring that their life insurance coverage remains in force even if they become unable to pay premiums due to a disability. When a policyholder becomes disabled and meets the conditions outlined in the rider, the insurance company waives any premium payments for the duration of the disability. This feature is particularly beneficial as it allows individuals to maintain their life insurance protection without the added financial burden during a challenging time. The other options represent concepts that are not aligned with the purpose of a premium waiver rider. For instance, increasing premium payments during hardship would not serve the interests of a policyholder facing difficulties. Similarly, the idea of cancelling the policy without penalty does not relate to waiving premium payments but rather involves terminating coverage altogether. Lastly, providing a loan against the policy’s cash value is a different aspect of policy use, focusing on accessing funds rather than addressing premium obligations. Thus, the function of a premium waiver rider is specifically to enable continued coverage without the requirement of premium payments during disability, making it an essential safeguard for policyholders.

A premium waiver rider in a life insurance policy is designed to protect the policyholder by ensuring that their life insurance coverage remains in force even if they become unable to pay premiums due to a disability. When a policyholder becomes disabled and meets the conditions outlined in the rider, the insurance company waives any premium payments for the duration of the disability. This feature is particularly beneficial as it allows individuals to maintain their life insurance protection without the added financial burden during a challenging time.

The other options represent concepts that are not aligned with the purpose of a premium waiver rider. For instance, increasing premium payments during hardship would not serve the interests of a policyholder facing difficulties. Similarly, the idea of cancelling the policy without penalty does not relate to waiving premium payments but rather involves terminating coverage altogether. Lastly, providing a loan against the policy’s cash value is a different aspect of policy use, focusing on accessing funds rather than addressing premium obligations. Thus, the function of a premium waiver rider is specifically to enable continued coverage without the requirement of premium payments during disability, making it an essential safeguard for policyholders.