A Massachusetts universal life policy includes a waiver-of-stipulated-premium benefit governed by M.G.L. c. 175, § 24. How does this benefit differ from the traditional waiver of premium on a whole life policy?
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
A universal life policy has no fixed scheduled premium in the whole life sense: the owner may pay flexibly, and the insurer deducts monthly charges — the cost of insurance and policy expenses — from the accumulated account value. A waiver-of-stipulated-premium benefit under M.G.L. c. 175, § 24 is built around that mechanics: upon qualifying disability, the insurer advances or credits the stipulated deductions so the account value is not drained and the policy stays in force. Traditional waiver of premium on a whole life policy, by contrast, simply excuses the fixed periodic premium. The difference is the payment architecture each product uses.
Why the other options are wrong
- B) The benefit must cover the policy's charges well enough to keep the policy in force; waiving only part of the deductions would let the account value drain and the policy lapse.
- C) No refund of past premiums is involved; the benefit operates prospectively by covering the stipulated charges during disability.
- D) The policy remains universal life; nothing in M.G.L. c. 175, § 24 converts it into a participating whole life contract.
Memory hook
Whole life waives the bill; universal life pays the meter that keeps the policy alive.