Massachusetts Health & Accident Insurance Practice Exam

What is the purpose of a Waiver of Premium Rider in insurance policies?

1. Exempts the insured from paying premiums after a specified period of disability

2. Offers a one-time lump sum payment for injuries

3. Provides coverage for individuals over the age of 65

4. Increases benefits each year based on inflation

The correct answer is: Exempts the insured from paying premiums after a specified period of disability

The Waiver of Premium Rider is a valuable feature in insurance policies primarily designed to protect individuals facing a significant financial burden due to disability. When an insured individual becomes disabled and meets the criteria outlined in the policy, this rider allows them to stop making premium payments without losing their coverage. This is particularly important as it ensures that those who are unable to work due to disabilities can maintain their insurance protection without the added stress of premium payments during a challenging time. The rider typically comes into effect after a specified waiting period and can be crucial for individuals who rely on their insurance during their recovery. It guarantees that even if they face a significant lapse in income due to their condition, their policy remains active, allowing them to focus on their health and recovery without losing critical benefits. This aspect of the Waiver of Premium Rider is what makes it an essential provision for insured individuals who might otherwise struggle to keep up with payment obligations while managing their disabilities.