Final answer:
The provision that allows for waivers of premiums due to a juvenile life policyholder's disability is the b) Waiver of Premium Rider. An actuarially fair premium accurately reflects the risk, and when information is incomplete, a group's fair premium is an average, which could lead to adverse selection.
Step-by-step explanation:
This rider ensures that if the policyholder becomes critically ill or disabled and is unable to pay the premiums, the insurance company will waive them and keep the policy active.
An actuarially fair premium is one that is calculated to be in line with the expected cost of the insured risk. In the context of life insurance, actuaries would calculate these premiums based on various risk factors such as age, health, and family medical history.
In situations where an insurance company cannot differentiate between risks due to imperfect information, the actuarially fair premium for the entire group would be averaged out. This leads to a situation where individuals who are at lower risk may end up subsidizing those at higher risk. If an insurance company charged the group premium to everyone, it could result in adverse selection, where higher risk individuals are more likely to buy the insurance while lower risk individuals opt out, potentially destabilizing the insurance pool. The provision that guarantees that premiums will be waived if a juvenile life policy owner becomes disabled is B) Waiver of Premium Rider.