64. Which of the following statements is CORRECT about a Disability Income policy with a Guaranteed Insurability rider?
Answer: C
The insured may periodically increase the amount of benefits payable under the policy.
A Disability Income policy with a Guaranteed Insurability rider allows the insured to increase their benefit amounts at specified intervals without needing to provide proof of insurability. This feature is particularly beneficial as it ensures that coverage can adapt to the insured's changing needs over time.
A) The insurance company guarantees the premium rate for the life of the policy.
This option is incorrect because the Guaranteed Insurability rider specifically pertains to the ability to increase benefits without proof of insurability, not to the guarantee of premium rates. Premiums may still vary based on other factors even with this rider.
B) The insured must periodically provide proof of insurability to the insurance company.
This statement is incorrect as the essence of the Guaranteed Insurability rider is that it allows the insured to increase benefits without needing to provide proof of insurability. Thus, this option contradicts the purpose of the rider.
C) The insured may periodically increase the amount of benefits payable under the policy.
This statement is correct, as the Guaranteed Insurability rider explicitly allows the insured to increase their benefit amounts at predetermined times without having to demonstrate insurability. This feature ensures that the policy can adjust to the insured's evolving financial needs.
D) The insurance company must exchange the original policy for a new one at the insurability date.
This option is incorrect because a Guaranteed Insurability rider does not necessitate the exchange of the original policy for a new one. Instead, it allows for increases in coverage under the existing policy without the need for a new contract.
Conclusion
The correct answer is C because it accurately reflects the key feature of a Guaranteed Insurability rider, which is the ability to increase benefit amounts without proof of insurability. All other options either misrepresent the rider's function or introduce incorrect requirements, confirming that C is the only accurate statement regarding this type of policy.