Assignment Chapter 7 NAME:
1.
Discuss
three types of supplemental disability benefits that life insurance policies often provide.
a.
b.
c.
2. Regarding the waiver of premium (WP) rider on a life insurance policy:
a. What does this rider provide?
b. What must a policyowner do to qualify for WP benefits?
c. What is the definition of “total disability” under most WP riders?
d. Name three disabilities that are typically excluded from the WP benefits.
3. Provide an example of the use of each of the following:
(1) Accelerated Death Benefit (also called _____________):
(2) Terminal Illness benefit:
(3) Dread Disease Benefit:
(4) Second Insured Rider:
4. Your friend Michael is married and has two teenage school children. His wife does not work outside their home, on which they have a $190,000 mortgage. Michael has asked you for advice on the best type of life insurance to purchase and what riders he would need. Briefly discuss the type of coverage he should purchase as well as three riders that he should purchase with his life insurance policy.
5. Rebekah Kraft, age 29, died when the commercial airplane on which she was traveling as a passenger crashed, killing everyone on board. At the time of her death, Ms. Kraft was insured by a $300,000 whole life insurance policy with a typical double indemnity accidental death benefit rider. This information indicates that the insurer is liable for paying the designated beneficiary of Ms. Kraft’s policy $____________________________.
6. Liam Morris is the policyowner-insured of a whole life insurance policy issued by the Southern Life Insurance Company. Mr. Morris was injured in an accident and was unable to work for 18 months. After Mr. Morris satisfied a three-month waiting period, Southern began paying the renewal premiums on Mr. Morris’s policy, and the policy’s cash value continued to increase just as if Mr. Morris were paying the premiums himself. This information indicates that Mr. Morris’s policy contained a
a. waiver of premium for payor benefit
b. waiver of premium for disability (WP) benefit
c. paid-up additions option benefit
d. disability income benefit
7. Fant Gritton is the policyowner-insured of a $200,000 whole life insurance policy. The policy includes a supplemental benefit rider that gives Mr. Gritton the right to purchase $25,000 of additional whole life insurance at age 34, age 37, and age 40, without submitting evidence of insurability. This information indicates that Mr. Gritton’s policy includes the type of supplemental benefit known as
a. an additional insured rider
b. a paid-up additions option benefit
c. a guaranteed insurability (GI) benefit
d. credit life insurance
8. One type of supplemental accident benefit is the accidental death and dismemberment (AD&D) benefit. AD&D benefits generally specify that the
a. insured must be totally disabled and unable to work in order to receive any benefits.
b. insurer will pay both accidental death benefits and dismemberment benefits for injuries suffered in the same accident.
c. insured must suffer the actual physical loss of a limb to qualify for dismemberment benefits.
d. dismemberment benefit is payable if an accident causes the insured to lose any two limbs or sight in both eyes.
9. One benefit that may be added to an individual life insurance policy is the disability income benefit. One true statement about a supplemental disability income benefit is that
a. the insured must be totally disabled to receive the benefit
b. the insurer begins paying benefits at the start of the disability
c. life insurance policies that include a disability income benefit rarely include a waiver of premium for disability (WP) benefit as well
d. the amount of the monthly disability income benefit is a percentage of the insured’s current earnings
10. Helen Smith, the policyowner-insured of a whole life insurance policy, wants to add a second insured rider to the policy so that her business partner, Jane Fox, will be provided with life insurance coverage. The insurer most likely will base the premium rate for the coverage provided by the rider on
a. the combined risk characteristics of Ms. Smith and Ms. Fox
b. the risk characteristics of Ms. Smith only
c. the risk characteristics of Ms. Fox only
d. a flat amount that the company charges for all second insured riders