Rhode Island Life Insurance Practice Exam

Which statement about the Waiver of Premium provision is NOT correct?

1. Insured must be eligible for Social Security disability for claim to be accepted

2. Coverage continues without requiring premium payments

3. Applies after a specified waiting period

4. Available only for permanent life insurance policies

The correct answer is: Insured must be eligible for Social Security disability for claim to be accepted

The Waiver of Premium provision is a beneficial feature in many life insurance policies that allows policyholders to maintain their coverage without paying premiums under certain conditions, typically if they become disabled. The provision is activated under specific criteria, often requiring a disability that meets the insurance company's definitions rather than strictly being dependent on Social Security disability eligibility. This means that while Social Security disability status can be part of the assessment, it is not a mandatory prerequisite for claims to be accepted under the Waiver of Premium clause. Therefore, stating that the insured must be eligible for Social Security disability for the claim to be accepted misrepresents the actual terms of the waiver. The other aspects of the Waiver of Premium provision highlight its benefits accurately. Coverage does indeed continue without requiring further premium payments for the duration of the disability, demonstrating the protection this provision offers. Additionally, the application of this waiver typically comes into effect after a defined waiting period, allowing the insurer time to assess the claim's validity. Finally, although it is commonly found in permanent life insurance policies, the statement suggesting it is available only for these policies overlooks that many term policies may also offer this provision under specific circumstances.