Difficulty: Medium

Average Score: 50%

Which of the following is TRUE of a payor benefit rider?

Rationale

Waives premiums on a juvenile policy if the policyowner becomes totally disabled or dies.

A payor benefit rider is specifically designed to protect juvenile policies by waiving the premiums if the policyowner becomes totally disabled or passes away, ensuring that the policy remains in force for the child without financial burden.

A (Waives premiums on a juvenile policy if the policyowner becomes totally disabled or dies.) CORRECT

This statement accurately describes the function of a payor benefit rider. It specifically addresses the scenario in which the policyowner, who is responsible for paying premiums on a juvenile policy, is unable to continue making those payments due to total disability or death.

B (Pays a monthly income to the policyowner if the insured is totally disabled.) YOUR ANSWER

This choice incorrectly describes a different type of rider, commonly known as a disability income rider. This rider provides income to the policyowner if the insured individual becomes totally disabled, rather than waiving premiums on a juvenile policy.

C (Waives policy premiums if the insured becomes totally disabled.) YOUR ANSWER

While this statement discusses the waiver of premiums, it is misleading because it refers to the insured being disabled instead of the policyowner. The payor benefit rider is contingent upon the policyowner’s disability or death, not the insured’s condition.

D (Increases the value of the policy if the policyowner dies.) YOUR ANSWER

This answer does not accurately represent the function of a payor benefit rider. Instead, it suggests a feature more relevant to a death benefit or policy increase rider, which is unrelated to the waiver of premiums due to the policyowner's disability or death.

Conclusion

The payor benefit rider is crucial for juvenile policies, ensuring that premiums are waived in the event of the policyowner’s total disability or death. This feature helps maintain coverage for the child without financial strain on the family during difficult times. Other choices present different riders or incorrect interpretations of this rider's function, highlighting the importance of understanding the specific benefits associated with each type of insurance rider.

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