12. Which of the following is TRUE of a payor benefit rider?
Answer: A
Waives premiums on a juvenile policy if the policymaker becomes totally disabled or dies.
A payor benefit rider is designed to ensure that premiums on a juvenile life insurance policy are waived in the event that the policyholder becomes totally disabled or passes away. This feature provides financial protection for the child’s insurance coverage during a difficult time for the family.
A) Waives premiums on a juvenile policy if the policymaker becomes totally disabled or dies.
This option is correct as it accurately describes the function of a payor benefit rider. It specifically applies to juvenile policies, ensuring that if the adult who pays the premiums becomes disabled or dies, the child’s coverage remains intact without the need for further premium payments.
B) Pays a monthly income to the policymaker if the insured is totally disabled.
This option is incorrect because it describes a different type of insurance benefit, often associated with disability income policies, rather than a payor benefit rider. A payor benefit rider does not provide income but rather waives premiums.
C) Waives policy premiums if the insured becomes totally disabled.
While this option sounds similar, it is incorrect because it does not specify that it applies only to juvenile policies or that it pertains to the policymaker's disability. The payor benefit rider specifically protects juvenile policies when the policymaker, not the insured, becomes disabled.
D) Increases the value of the policy if the policymaker dies.
This option is incorrect as it does not reflect the purpose of a payor benefit rider. Instead, it suggests a feature that may be found in other types of policies, such as those with a death benefit rider, but does not relate to waiving premiums due to the policymaker's disability or death.
Conclusion
The payor benefit rider is specifically designed to protect juvenile policies by waiving premiums in the event of the policymaker's total disability or death, making option A the only correct choice. All other options misrepresent the functionality of this rider, either by describing different types of benefits or by failing to properly connect to the context of the payor benefit rider.