Massachusetts Life Producer Practice Exam

How is the insured protected if a payer benefit rider is attached to the life insurance policy?

1. Premium payments are eliminated for life

2. Premium payments are waived in the event of the premium payer's death or disability

3. The policy cash value increases automatically

4. The death benefit is doubled

The correct answer is: Premium payments are waived in the event of the premium payer's death or disability

The insurer offers additional protection through a payer benefit rider by waiving premium payments in the event that the person responsible for paying the premiums (the premium payer) dies or becomes disabled. This ensures that the life insurance policy remains in force even if the premium payer can no longer contribute financially due to unforeseen circumstances. This rider is particularly significant for policies taken out on the life of a child or dependent, as it safeguards the policy from lapsing due to the financial incapacity of the payer. Therefore, if the premium payer passes away or is unable to fulfill their payment obligations, the insurer will cover those premium costs, ensuring the life insurance coverage continues without requiring additional payments from the insured or their family during a challenging time. This mechanism of protection is not designed to increase the policy's cash value or double the death benefit, nor does it eliminate premium payments indefinitely. Instead, it specifically addresses the situation where the premium payer’s death or disability could jeopardize the existence of the policy.