Final answer:
The Term Life Rider covering the spouse typically terminates when the policyholder and the spouse divorce. It is not affected by the policyholder reaching retirement age, their children's graduation, or the purchase of a new car.
Step-by-step explanation:
The Term Life Rider covering the spouse generally terminates when a significant life event occurs that affects the insurance policy's validity or applicability to the spouse. In this context, the correct answer is B. The policyholder and spouse divorce. The termination of a Term Life Rider often coincides with events that alter the dependency or financial obligations towards the insured party, in this case, the spouse. If the policyholder reaches retirement age, it doesn't automatically end the spouse's coverage. Similarly, the policyholder's children graduating from college or the policyholder buying a new car are unrelated events with regard to the termination of a Term Life Rider.
Policies and riders related to insurance coverage are designed to payout in different situations, such as when medical expenses are incurred, the policyholder dies, a car is damaged, stolen, or causes damage to others, or a dwelling is damaged or burglarized. However, these payouts are based on the events stipulated in the policy, and changes in personal circumstances, like divorce, may lead to changes in the policy's status or the termination of certain coverages.