Riders - Life Insurance Exam Prep

Summary

This video covers essential life insurance riders that enhance policy coverage. Key topics include children's and spouse term riders, guaranteed insurability riders, and disability waiver riders. The script explains how these riders add flexibility and additional protection, allowing policyholders to adjust coverage without re-underwriting or during life events like marriage or disability. It also highlights how term riders can complement whole life policies and how the waiver of premiums helps maintain coverage during disability. The video offers a comprehensive guide to these riders, providing valuable insights for individuals seeking customized insurance solutions.

Takeaways

• 😀 Children's riders can either cover all children under one premium or charge an individual premium for each child added to the policy.
• 😀 Spouse riders provide coverage for a policyholder's spouse and usually expire at age 65.
• 😀 Non-family insured riders allow policyholders to add coverage for other individuals, but these riders require evidence of insurability.
• 😀 Guaranteed insurability riders allow policyholders to add coverage without reapplying for underwriting, often at specified intervals or during life events like marriage or childbirth.
• 😀 The guaranteed insurability rider typically expires at age 40 and can be used to increase coverage without going through the underwriting process.
• 😀 The waiver of premium rider waives the policyholder's premiums if they become totally disabled, after a waiting period of 6 months.
• 😀 The waiver of monthly deductions rider applies to universal and variable universal life policies, covering the base premium if the insured is disabled for over 6 months.
• 😀 The waiver of monthly deductions rider will only cover the base premium, not additional payments that contribute to cash value accumulation.
• 😀 Term riders allow policyholders to add term life coverage to their whole life policies, offering extra coverage at a lower cost compared to a separate term policy.
• 😀 The disability waiver of premium rider starts after the policyholder is disabled for 6 months and refunds previous premium payments if the disability continues.
• 😀 After two years of being disabled, the disability waiver of premium rider shifts to cover the inability to perform any job, not just the policyholder's specific occupation.

Q & A

What is a Children's Term Rider in life insurance?

A Children's Term Rider is an addition to a life insurance policy that provides coverage for the policyholder's children. It can either cover all children under a single premium or charge an additional premium for each child added. The coverage typically expires when the children turn 18, 21, or 25, depending on the policy.

How does a Spouse Term Rider work in life insurance?

A Spouse Term Rider provides life insurance coverage for the policyholder's spouse. If the spouse passes away, the rider will offer a payout. The coverage typically expires when the spouse reaches age 65.

What are Other Insured Riders in life insurance, and how do they function?

Other Insured Riders allow the policyholder to add additional people (such as family members) to the policy. These riders may come with underwriting requirements to ensure that the added individuals are insurable. For example, children can't be severely ill, and a spouse can't be terminally ill when added.

What is a Guaranteed Insurability Rider, and how does it benefit policyholders?

A Guaranteed Insurability Rider allows policyholders to increase their coverage at specified intervals (such as every three years) without having to undergo additional underwriting. This is useful for increasing coverage over time without proving insurability again, but it typically expires at age 40.

What does the Waiver of Premium Rider do?

The Waiver of Premium Rider ensures that the policyholder’s premiums are waived if they become disabled. After a waiting period (usually six months), the insurance company will cover the premiums for the policyholder while they are disabled.

How does the Waiver of Monthly Deductions Rider work with Universal Life policies?

The Waiver of Monthly Deductions Rider, specific to Universal Life and Variable Universal Life policies, covers the basic insurance expenses (premium loading charges, insurance expenses) if the policyholder becomes disabled. However, it does not cover premiums that accumulate cash value. The rider ensures that the policy remains in force even if the policyholder is disabled.

What is the purpose of a Term Rider in a Whole Life policy?

A Term Rider allows the policyholder to add term life insurance to a Whole Life policy. This gives the policyholder additional coverage at a lower cost than purchasing a separate term policy. It helps in increasing coverage and accumulating cash value faster in the whole life policy.

What does the Disability Waiver of Premium Rider require in terms of proving disability?

To activate the Disability Waiver of Premium Rider, the policyholder must prove they are totally disabled for at least six months. After six months, they must prove they are permanently disabled. After two years, the policyholder must demonstrate they are unable to perform any job, not just their regular job, based on their skills and experience.

What happens if the policyholder becomes permanently disabled and has a Universal Life policy with a Waiver of Monthly Deductions Rider?

If the policyholder becomes permanently disabled, the Waiver of Monthly Deductions Rider will cover the basic premiums to keep the policy in force, but it will not cover additional premiums that accumulate cash value. The insurance company will refund premiums paid during the period of disability if applicable.

What is the key difference between a Children's Term Rider that covers all children and one where each child has an additional premium?

A Children's Term Rider that covers all children under one premium charges a single amount for all children, while a rider where each child has an additional premium charges an extra amount for every child added. The latter may increase the policy's premium based on the number of children covered.