A disability income rider attached to a life insurance policy generally provides:
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
The disability income rider pays a monthly benefit, usually equal to a stated dollar amount or a percentage of the face amount, if the insured becomes totally disabled. Benefits typically begin after an elimination period and continue while the disability lasts, subject to the rider's limits. This rider is distinct from a waiver of premium rider, which merely stops premium payments, and it is priced as an additional benefit attached to the life policy. The benefit amount and elimination period are chosen at issue and are set out in the rider's schedule.
Why the other options are wrong
- B) The face amount is paid only at death; the rider pays periodic income during a qualifying disability. The benefit stops when the disability ends or when the rider's maximum benefit period is reached.
- C) Waiver of premium forgives premiums, but the disability income rider actually provides income in addition to any waiver. The face amount is paid at death; this rider instead pays income during a qualifying total disability.
- D) An accidental death benefit pays on accidental death; the disability income rider pays while the insured lives but is disabled. Waiver of premium is a separate rider that forgives premiums without paying any income to the insured.
Memory hook
Disability rider pays a paycheck when the insured is down. Waiver only pauses the bills; income rider covers the groceries.