A life insurance policy includes a disability income rider. If the insured becomes totally disabled, this rider provides:
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
A disability income rider attached to a life insurance policy pays the insured a monthly income if the insured becomes totally disabled, typically after a waiting or elimination period. The benefit amount is usually limited to a specified percentage of the policy's face amount and is payable for a defined period. The rider adds protection for the insured's earning power while the life policy continues to provide the death benefit for the family. The elimination period and the benefit cap make the rider affordable, and the agent should explain both so the insured understands the rider is supplemental income protection rather than a replacement of the death coverage.
Why the other options are wrong
- B) Waiving the death benefit would defeat the purpose of the life policy; the rider adds income protection and does not remove the death coverage. The base policy keeps its death benefit; the rider only adds the income protection.
- C) The face amount is paid at death, not during disability; the rider pays monthly income, not the lump-sum death benefit. The face amount is reserved for death; the rider pays a smaller monthly income during disability.
- D) The rider does not reduce the cash value; it provides an additional income benefit while the base policy continues unchanged. The cash value is untouched by the rider, and the base policy's economics do not change.
Memory hook
Disability rider = the policy sends you a paycheck while you cannot earn one.