Tom has a rider on his disability income policy that guarantees the right to increase his benefits without a medical exam. What kind of rider is this?
The Correct Answer Is:
d. Guaranteed insurability rider
Correct Answer Explanation:
The correct answer is d. Guaranteed insurability rider.
Guaranteed Insurability Rider (GIR) is a valuable addition to a disability income insurance policy that allows the policyholder, in this case, Tom, to increase the benefits of the policy without undergoing a medical exam or providing evidence of insurability.
This rider offers financial security and flexibility to the policyholder, especially if their health status changes over time, as it guarantees the right to purchase additional coverage when needed, regardless of any health changes or issues that may have developed since the original policy was issued.
This can be essential for someone with a disability income policy, as they may require additional benefits if their income or financial needs change due to circumstances related to their disability.
Explanation of why the other options are not correct:
Now, let’s discuss why the other options are not correct:
a. Waiver of Premium Rider:
The Waiver of Premium Rider is a different type of rider that is commonly associated with life insurance and disability insurance policies. This rider is designed to provide financial relief to the policyholder in the event that they become disabled and are unable to work.
Specifically, it waives the requirement for the policyholder to continue paying premiums while they are disabled, ensuring that their coverage remains in force even if they are unable to generate income.
However, it does not grant the policyholder the right to increase the benefits of the policy without a medical examination. Therefore, while the Waiver of Premium Rider is a valuable addition to a disability insurance policy, it does not fulfill the specific requirement described in the question.
b. Guaranteed Benefit Rider:
The term “Guaranteed Benefit Rider” does not correspond to a standard insurance industry terminology. It is possible that this option is a non-standard or non-existent rider in insurance policies.
Without a clear definition or standard application of this term, it cannot be considered a correct answer in this context.
c. Payor Benefit Rider:
The Payor Benefit Rider is typically associated with juvenile life insurance policies. It is a rider that provides coverage in the event that the policyholder (usually a parent or guardian) becomes disabled or dies before the insured child reaches a certain age.
This rider ensures that the policy remains in force even if the payor is no longer able to make premium payments. However, this rider is not relevant to disability income policies for adults. It does not address the specific scenario described in the question, where Tom wants to increase his benefits without a medical exam.
In summary, the Guaranteed Insurability Rider is the only option that aligns with the scenario presented in the question. It specifically allows the policyholder to increase their benefits without the need for a medical examination, providing a valuable level of flexibility and security, especially in the context of disability income insurance.
The other options do not provide this specific benefit and are therefore not the correct answers in this context.
In essence, the Guaranteed Insurability Rider uniquely offers Tom the ability to enhance his disability income benefits without undergoing a medical exam, setting it apart from the other riders which do not provide this specific provisions.