Insurance Riders Overview

What is another name for the Guaranteed Insurability Rider?

What is generally not allowed when exercising the additional purchase option after age 50?

What determines the premium for the additional insurance amount purchased under this rider?

What must be fulfilled before each purchase under the Guaranteed Insurability Rider?

At what intervals are insured individuals typically given the option to purchase additional coverage?

What is the primary purpose of an impairment or exclusion rider?

How might an impairment rider affect the cost of an insurance policy?

In which situation might a person find an impairment rider beneficial?

What factor does the underwriter consider when issuing an exclusion rider?

Which statement is true regarding impairment or exclusion riders in insurance policies?

What is a temporary impairment rider?

Which is NOT a characteristic of the impairment rider?

When might a policy be issued with an exclusion rider?

Impairment or Exclusion Rider

An impairment rider eliminates coverage for specific pre-existing conditions, like back injuries.
It can be temporary or permanent; once applied, it excludes certain conditions from coverage.
Insurers often use exclusion riders to grant access to insurance for individuals with existing impairments, despite higher risks.
Example: A physician may receive a disability policy with an exclusion on back-related claims, allowing coverage for other disabilities.
Terms of the exclusion are explicitly stated in the insurance policy, emphasizing clarity.
Unlike most riders adding coverage, the impairment rider removes coverage without reducing premium costs.

Guaranteed Insurability Rider

Also known as the Future Increase Option or Guaranteed Purchase Option.
Allows insured individuals to purchase additional disability income coverage without proving insurability.
Insureds receive specific option dates, typically every two years, to exercise this additional coverage.
Companies generally restrict exercising the option beyond age 50 to limit risk exposure.
Premiums for additional insurance are calculated based on the insured’s age at the time of purchase.
To prevent over-insurance, an earnings test is required before each purchase option.
Insurers often cap the coverage amount available at each option date, typically between $500 and $5,000.

This quiz covers the concept of impairment or exclusion riders in insurance policies. Understand how these riders affect coverage for pre-existing conditions like back injuries. Explore the implications of temporary versus permanent riders in insurance contracts.