An insured owns a whole life policy with a rider that provides term insurance coverage on the insured's spouse and each child until the children reach a specified age. This attachment is known as a:
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
A family term rider adds level term insurance on the insured's spouse and eligible children to the insured's base permanent policy, with the children's coverage typically ending at a stated age. It is an economical way to cover family members under one policy, and the spouse's term coverage may be convertible. This is distinct from a payor rider (which waives premiums on a juvenile policy if the payor dies or becomes disabled), a guaranteed insurability rider (which allows buying additional coverage without evidence of insurability), and a cost of living rider (which adjusts the death benefit for inflation).
Why the other options are wrong
- B) A payor rider protects the premium on a juvenile policy if the premium payer dies or becomes disabled. It does not add term coverage on the insured’s spouse, which is the function of the family term rider.
- C) A guaranteed insurability rider permits future purchases of additional coverage at specified times without new evidence of insurability. It does not insure the spouse and children under the policy. The correct answer is the family term rider, which adds term coverage for the spouse and children.
- D) A cost of living (COLA) rider increases the death benefit to offset inflation. It does not insure the spouse and children, which is exactly what the family term rider does. The correct answer is the family term rider, which adds term coverage for the spouse and children.
Memory hook
Family term rider = add-on coverage for the whole nest. Spouse and kids insured under the main policy's wing.