Final answer:
The waiver of cost of insurance rider is used with universal life insurance policies, helping to maintain coverage if the insured becomes disabled. Insurance companies might offer a high copay policy to individuals seeking a lower premium, while a high premium policy with lower copays may appeal to those requiring frequent medical care.
Step-by-step explanation:
The waiver of cost of insurance rider is typically used for universal life insurance policies. This rider allows for the continuation of insurance coverage without the policyholder having to pay the premiums if they become disabled and are unable to work. It is similar to coinsurance, where an insurance policyholder pays a percentage of a loss, and the insurance company pays the remaining cost. However, with the waiver of cost of insurance rider, the insurance company takes on the cost of the premiums under certain conditions, rather than sharing the cost of a loss.
Insurance companies might offer a policy with a high copay to those who prefer to pay a lower monthly premium, often younger or healthier individuals who do not expect to need frequent medical care. Conversely, policies with a high premium but lower copays might be offered to those who expect to need more medical attention and prefer lower out-of-pocket expenses each time they receive care.