Management Notes

Reference Notes for Management

The waiver of premium does NOT include which provision?

Looking for the answer to the question below related to  Management ?

The waiver of premium does NOT include which provision?

 Options:

a) All future premiums are waived if the insured recovers from the disability
b) If the insured qualifies, the premiums are waived retroactively to the beginning of the disability
c) The waiver of premium generally does not extend past the insured’s age 60 or 65
d) The insured must be disabled for a set period of time before benefits begin

The Correct Answer Is:

  • All future premiums are waived if the insured recovers from the disability

.

Explanation of the Correct Answer (Option A):

The statement “All future premiums are waived if the insured recovers from the disability” is not accurate.

Insurance policies usually have provisions allowing the insured to waive their premiums for as long as they remain disabled, which prevents them from having to pay premiums during the disability period. When the insured recovers from the disability and is no longer disabled, the waiver of premium provisions usually cease to apply.

Essentially, once the insured is no longer disabled, they are usually required to resume paying premiums. In some cases, the insured can convert the policy to a term life policy. This is a common feature of waivers of premium provisions in insurance policies.

The policyholder should check the policy details to determine what the waiver stipulates. It may also be possible for the insured to transfer the policy to a family member in some cases.

Explanation of Why the Other Options Are Not Correct:

b) If the insured qualifies, the premiums are waived retroactively to the beginning of the disability

In general, this statement is correct. In many cases, premiums can be waived retroactively to the beginning of the disability period, ensuring that the insured does not have to pay premiums until the end of their disability period.

As a result of this waiver, the insured is able to significantly reduce the burden of paying premiums while unable to work, which is beneficial to them. Moreover, the waiver preserves the insured’s insurance policy, ensuring that they will still be covered in the event of an unexpected disability.

c) The waiver of premium generally does not extend past the insured’s age 60 or 65

This statement is not entirely accurate. The age at which the waiver of premiums ceases to apply can be different depending on the insurance policy. There may be age limitations on some policies, such as 60 or 65, while other policies may have different age limits or no age limits at all. The age limit varies from policy to policy.

d) The insured must be disabled for a set period of time before benefits begin

The statement is generally true. Most insurance policies require the insured to be disabled for a specified period before the premium waiver kicks in. It ensures the disability is not temporary and that the insured is truly in need of a premium waiver due to a more extensive disability. There can be a difference in the waiting period between policies, but it is a standard requirement.

Conclusion:

In summary, the waiver of premium provision in insurance policies is designed to relieve the insured of premium payments during a disability. When the insured recovers from the disability, this clause generally does not waive premiums again.

The other options describe the features of common waiver provisions and their limitations, which vary according to the policy terms and conditions.

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