Maryland Life and Health Insurance License Practice Exam

A life insurance policyowner was injured in an automobile accident which results in a total and permanent disability. Which rider would pay a monthly amount because of this disability?

1. Disability income rider

2. Accidental death rider

3. Waiver of premium rider

4. Long-term care rider

The correct answer is: Disability income rider

The disability income rider is designed specifically to provide the policyholder with a monthly income if they suffer from a total and permanent disability. This rider is an additional feature that can be attached to a life insurance policy, ensuring that the individual receives financial support when they are unable to work due to a qualifying disability. This is particularly important as it helps cover living expenses during a time when income may be drastically reduced or eliminated. When a policyholder is involved in an accident that results in a permanent inability to perform work duties, the disability income rider comes into play, paying out a predetermined monthly benefit. In contrast, the accidental death rider typically provides a lump-sum benefit to the beneficiaries if the insured dies as a result of an accident, rather than supporting the insured during their period of disability. The waiver of premium rider allows the insured to stop paying premiums during a period of disability, but it does not offer any income replacement. The long-term care rider provides benefits for nursing home care or in-home assistance, focusing on custodial care rather than income during disability. Thus, the disability income rider is specifically tailored to address the income needs of an individual experiencing total and permanent disability, making it the correct choice for this scenario.