Question 11

A rider waiving premiums is called a disability rider.

A disability rider is specifically designed to waive premiums in the event that the insured becomes disabled and unable to work, thus ensuring that the policy remains in force without further payments.

A) disability rider.

This option is correct because a disability rider is explicitly intended to waive premiums if the policyholder becomes disabled. It provides financial protection by allowing the insured to maintain their insurance coverage without the burden of premium payments during a period of incapacity.

B) term rider.

A term rider typically refers to an additional term life insurance policy added to a permanent policy, providing coverage for a specific period. It does not relate to waiving premiums in the event of disability, making this option incorrect.

C) cost of insurance rider.

A cost of insurance rider pertains to the charges associated with the insurance coverage's mortality and administrative costs. It does not address the waiver of premiums due to disability, thus rendering this option incorrect.

D) cost of living rider.

A cost of living rider is designed to increase the death benefit over time to keep pace with inflation. It does not involve the waiving of premiums for any reason, including disability, making this option incorrect.

Conclusion

The disability rider is the only option that accurately describes a rider that waives premiums in the event of the insured's disability. All other options either serve different functions or do not relate to premium waivers at all, confirming that A is the definitive correct answer.