Question

What is the advantage of a Waiver of Premium provision in a life policy?

A. It increases the death benefit.
B. It allows the policyowner to skip premium payments.
C. It provides an accelerated death benefit.
D. It keeps the policy in force if the insured becomes disabled.

Answer 1

The advantage of a Waiver of Premium provision in a life policy is D. It keeps the policy in force if the insured becomes disabled.

Step-by-step explanation:

A Waiver of Premium provision is a valuable feature in life insurance that maintains the policy in force if the insured becomes disabled and unable to pay premiums due to the disability. When this provision is activated, the insurance company waives the premium payments for the policy while keeping the coverage active. This helps policyholders during times of financial hardship due to disability, ensuring that the life insurance coverage remains intact without lapsing. Essentially, it provides financial security by safeguarding the policy from termination due to the insured's disability, allowing them to focus on recovery without the burden of premium payments.

Unlike options A, B, and C, which respectively don't apply to a Waiver of Premium provision – it doesn't increase the death benefit, allow premium skipping, or offer an accelerated death benefit – option D accurately represents the primary advantage of this provision: preserving the policy's coverage in the event of the insured's disability, ensuring the policy remains active without the requirement of premium payments.

Answer 2

A Waiver of Premium in a life insurance policy allows for the policy to stay in force if the insured becomes disabled, enabling them to maintain coverage without paying premiums during their disability. So, the correct answer is D. It keeps the policy in force if the insured becomes disabled.

Step-by-step explanation:

The advantage of a Waiver of Premium provision in a life insurance policy is D.

It keeps the policy in force if the insured becomes disabled.

A Waiver of Premium allows the policyowner to forego making premium payments during the period of their disability, which must be defined in the policy.

The life insurance remains active, even though the insured is not paying premiums, ensuring continued coverage without financial burden during a challenging time.

This provision can be particularly valuable because it ensures that the critical protection offered by the policy continues precisely when it may be most needed, as the inability to work and generate income due to disability could otherwise lead to a lapse in coverage due to nonpayment.

Thus, the correct answer is D. It keeps the policy in force if the insured becomes disabled.