Question 27

The policy remains in full force in every respect.

While an insurer is paying the premium for a life insurance policy under the waiver of premium rider, the policy remains active and continues to provide coverage as if the insured were paying the premiums themselves.

A) policy remains in full force in every respect.

This option is correct because the waiver of premium rider allows the insured to keep their life insurance policy active without making premium payments in cases of disability or certain qualifying events. The policy continues to provide coverage and accumulate benefits just as it would if premiums were being paid.

B) insurer is named as primary beneficiary.

This option is incorrect because the waiver of premium rider does not affect the designation of the beneficiary. The insured can name any person or entity as the beneficiary, and this remains unchanged while the waiver is in effect.

C) cash value does not increase.

This option is incorrect because even while premiums are waived, the cash value of the policy can still increase. The waiver of premium rider does not halt the growth of cash value, which continues as per the original terms of the policy.

D) dividend payments cease.

This option is incorrect because the waiver of premium rider does not automatically stop dividend payments. If the policy is eligible for dividends, they will continue to be paid out according to the policy's terms, regardless of whether premiums are being waived.

Conclusion

The correct answer is A, as it accurately reflects that the policy remains active when premiums are waived. The other options fail because they either misinterpret the effects of the waiver on beneficiary designations, cash value growth, or dividend payments, which are not impacted by the waiver of premium rider.