Rhode Island Life Insurance Practice Exam

In the event of policyholder disability, what does the Waiver of Premium provision protect?

1. Coverage remaining intact without premium payments

2. Higher death benefits to beneficiaries

3. Lower premium rates for future policies

4. Cash value increases during the disability period

The correct answer is: Coverage remaining intact without premium payments

The Waiver of Premium provision is designed to provide financial protection to policyholders who become disabled and are unable to continue making premium payments. When this provision is in place, the insurance company waives the requirement for premium payments during the period of the policyholder's disability. This ensures that the coverage remains intact, meaning the life insurance policy stays in force without lapsing due to non-payment. As a result, the insured can maintain their life insurance benefits without the financial strain of having to pay premiums while they are unable to work. The other options do not accurately reflect the function of the Waiver of Premium provision. Higher death benefits are not a feature of this provision, nor does it affect premium rates for future policies or guarantee cash value increases during the disability period. The primary focus of this provision is to alleviate the burden of premium payments in the event of a policyholder's disability, ensuring continuous coverage without interruption.