Question 75

The statement describes a Payor benefit rider.

A Payor benefit rider allows for the premium payments to be waived in the event that the policyholder (in this case, the parent) passes away, ensuring that the life insurance policy remains active until the child reaches a specified age.

A) Waiver of premium

The Waiver of premium rider typically allows the policyholder to stop paying premiums due to a disability or other qualifying events, but it does not specifically address the scenario of a parent passing away and the implications for a child’s policy. Therefore, it does not accurately reflect the situation described in the question.

B) Guaranteed Insurability

The Guaranteed Insurability rider provides the policyholder the option to purchase additional insurance coverage at specific times without needing to provide evidence of insurability. This does not relate to the waiver of premiums upon the death of a parent, making this option incorrect.

C) Payor benefit

The Payor benefit rider is designed specifically for situations where a parent or guardian pays the premiums for a child’s life insurance policy. If the payor dies, the premiums are waived until the child reaches a predetermined age, which directly aligns with the explanation provided in the question.

D) Family income

The Family income rider provides a benefit that pays a certain amount to the family for a specified period in the event of the insured's death. However, it does not deal with the waiving of premiums due to the death of the premium payor, thus making it irrelevant to the scenario described.

Conclusion

The Payor benefit rider is the only option that accurately reflects the situation where premiums are waived if the parent who pays them dies. All other options either do not address the specific condition of premium waiving or relate to different aspects of life insurance coverage. Hence, the Payor benefit rider is the correct answer to the question posed.