Tyler purchased a disability policy with a waiver of premium rider on April 1. He is disabled on May 1. On June 1, he receives proof of permanent and total disability, and submits a claim. He begins receiving benefits on June 15. When are his premiums waived?
The Correct Answer Is:
b. May 1
Correct Answer Explanation: b. May 1
The correct answer is May 1. The waiver of premium rider in a disability insurance policy is designed to waive the payment of future premiums if the policyholder becomes permanently and totally disabled.
In Tyler’s case, he purchased the disability policy with the waiver of premium rider on April 1. However, the key trigger for the waiver of premium benefit is the onset of disability.
Tyler became disabled on May 1, which means that as of this date, he meets the criteria for the waiver of premium to take effect.
The purpose of the waiver of premium rider is to alleviate the financial burden on the policyholder by exempting them from making premium payments during the period of disability. Therefore, starting from May 1, Tyler’s premiums would be waived.
Now, let’s explore why the other options are not correct: