Question 47

Payor benefit is designed to pay premiums on a child's policy if the parent dies.

The payor benefit rider ensures that if the policyholder (typically a parent) passes away, the insurance company will cover the premiums for the child's policy, allowing it to remain in force without additional financial burden on the family.

A) Payor benefit.

This option is correct as it explicitly addresses the scenario where the parent dies, and the rider takes effect to cover the premiums of the child's insurance policy. This ensures that the child maintains their coverage despite the loss of the parent's financial support.

B) Cost of living benefit.

The cost of living benefit is designed to increase the face value of a life insurance policy over time to keep pace with inflation, but it does not provide any assistance with premium payments in the event of the parent’s death. Therefore, this option does not fulfill the requirement stated in the question.

C) Accidental death benefit.

The accidental death benefit provides an additional payout if the insured dies due to an accident. While it offers financial support in the event of an accidental death, it does not specifically address the payment of premiums for a child's policy if the parent dies, making this option incorrect.

D) Guaranteed insurability benefit.

The guaranteed insurability benefit allows the policyholder to purchase additional insurance coverage at specific times without undergoing medical underwriting. This rider does not relate to premium payments for a child’s policy upon the parent's death, thus it is not the correct choice.

Conclusion

The payor benefit rider is uniquely designed to alleviate the financial burden of premium payments on a child's policy in the event of the parent's death, making it the only suitable option for this situation. All other options either serve different purposes or do not provide the necessary support for premium payments, confirming that A is definitively the correct answer.