Question 26

There will be no change in the policy other than the insured no longer has to pay the premiums on the policy.

When a waiver of premium rider is in effect, the insured does not have to pay premiums due to certain triggering conditions, but the terms of the policy itself remain unchanged.

A) The death benefit will be reduced by the amount of the unpaid premiums.

This statement is incorrect. The waiver of premium rider allows the insured to avoid paying premiums without affecting the death benefit amount. The death benefit remains intact despite the unpaid premiums.

B) The policy's cash value will continue to grow, but at a slower rate because the insured is no longer paying premiums.

This option is also incorrect. While the cash value can continue to grow, it does not necessarily grow at a slower rate solely due to the waiver of premiums. The growth of cash value is typically based on the policy's terms and conditions, not on premium payments.

C) The insured will automatically become eligible for accelerated death benefits.

This statement is misleading. Eligibility for accelerated death benefits is not directly tied to the waiver of premium rider. The conditions for accessing accelerated death benefits are usually separate and depend on the specifics of the policy and circumstances of the insured.

D) There will be no change in the policy other than the insured no longer has to pay the premiums on the policy.

This statement is correct. The waiver of premium rider allows the insured to stop making premium payments while keeping the policy in force without any alteration to the benefits or coverage terms.

Conclusion

The correct answer is definitive because the waiver of premium rider's primary function is to relieve the insured from the obligation of paying premiums while maintaining the integrity of the policy. Other options either misinterpret the effects of the rider or incorrectly associate it with other benefits, which are not necessarily linked to the waiver provision.