27. Which of the following is TRUE of a payor benefit rider?
Answer: A
Waives premiums on a juvenile policy if the policyowner becomes totally disabled or dies
A payor benefit rider specifically allows for the waiving of premiums on a juvenile policy in the event that the policyowner becomes totally disabled or dies, ensuring that the policy remains in force without additional financial burden during difficult times.
A) Waives premiums on a juvenile policy if the policyowner becomes totally disabled or dies
This option accurately describes the function of a payor benefit rider, as it provides a safeguard for juvenile policies by ensuring that premiums do not need to be paid if the policyowner is unable to fulfill that obligation due to total disability or death.
B) Pays a monthly income to the policyowner if the insured is totally disabled
This option is incorrect because it describes a different type of insurance provision, typically found in disability income policies, rather than a payor benefit rider, which does not provide monthly income but rather waives premiums.
C) Waives policy premiums if the insured becomes totally disabled
While this option mentions the waiving of premiums, it inaccurately states that the insured, rather than the policyowner, is the one whose total disability triggers the waiver. A payor benefit rider specifically relates to the policyowner's status.
D) Increases the value of the policy if the policyowner dies
This option is incorrect as it misrepresents the function of a payor benefit rider. It does not increase the policy's value upon the policyowner's death; rather, it focuses on maintaining coverage by waiving premiums.
Conclusion
The statement that a payor benefit rider waives premiums on a juvenile policy if the policyowner becomes totally disabled or dies is definitive and accurate. Other options fail to correctly describe the feature of a payor benefit rider, either misidentifying the party responsible for premium payment or describing unrelated insurance benefits. Therefore, option A stands as the only true statement regarding the rider's function.