Which insurance rider is designed to pay premiums on a child's policy if the parent dies?

Rationale

Payor benefit.

The payor benefit rider is specifically designed to cover the premium payments on a child's insurance policy in the event of the parent's death. This ensures that the child's coverage remains intact and continues without financial burden during a difficult time for the family.

A (Payor benefit.) CORRECT

This rider directly addresses the situation where a policyholder (typically the parent) passes away, ensuring that the premiums for the child's policy are paid. It provides peace of mind, knowing that the child's future insurance protection is secured despite the loss of income from the deceased parent.

B (Cost of living benefit.) YOUR ANSWER

The cost of living benefit rider typically adjusts the death benefit amount to keep pace with inflation, ensuring that the policy’s value does not diminish over time. It does not address payment of premiums, and therefore is not applicable to the scenario of a parent’s death affecting a child's policy.

C (Accidental death benefit.) YOUR ANSWER

An accidental death benefit rider provides an additional payout if the insured dies as a result of an accident. While it serves to enhance financial support for beneficiaries, it does not provide for the ongoing premium payments on a child’s policy, making it irrelevant in this context.

D (Guaranteed insurability benefit.) YOUR ANSWER

This rider allows the policyholder to purchase additional coverage at specific times without needing to provide evidence of insurability. It is unrelated to the payment of premiums on a child’s policy following a parent's death, thus failing to meet the requirement of the question.

Conclusion

The payor benefit rider is essential for ensuring that a child's insurance policy remains active by covering premiums if the parent dies. Other riders like the cost of living, accidental death, and guaranteed insurability benefits serve different purposes that do not relate to premium payments in the event of a parent's death. Understanding these distinctions is crucial for effective financial planning and insurance management.

Which insurance rider is designed to pay premiums on a child's policy if the parent dies?

Payor benefit.

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