Insurance Riders Overview
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Questions and Answers

What is another name for the Guaranteed Insurability Rider?

  • Future Payment Option
  • Future Increase Option (correct)
  • Evidence of Insurability Option
  • Guaranteed Purchase Rider
  • What is generally not allowed when exercising the additional purchase option after age 50?

  • Investment earnings will be included
  • Exercising the option based on the current health status
  • Request for increased coverage amount beyond a specified limit (correct)
  • Purchasing amounts exceeding normal insurance limits
  • What determines the premium for the additional insurance amount purchased under this rider?

  • The insured's original policy amount
  • The insured's age at the time the option is exercised (correct)
  • The duration of the policy
  • The health status of the insured at the time of the policy
  • What must be fulfilled before each purchase under the Guaranteed Insurability Rider?

    <p>An earnings test</p> Signup and view all the answers

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

    <p>Every two years</p> Signup and view all the answers

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

    <p>To delete coverage for a pre-existing condition</p> Signup and view all the answers

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

    <p>It does not change the premium</p> Signup and view all the answers

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

    <p>If they need affordable insurance despite a pre-existing condition</p> Signup and view all the answers

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

    <p>The potential for future claims unrelated to the impairment</p> Signup and view all the answers

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

    <p>They take coverage away from standard policies without altering premium costs.</p> Signup and view all the answers

    What is a temporary impairment rider?

    <p>A rider that may exclude coverage for a limited time</p> Signup and view all the answers

    Which is NOT a characteristic of the impairment rider?

    <p>It adds extra cost to the policy.</p> Signup and view all the answers

    When might a policy be issued with an exclusion rider?

    <p>When the applicant has previously suffered from an injury</p> Signup and view all the answers

    Study Notes

    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.

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    Description

    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.

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