12.6 Policy Riders
Impairment Rider
An impairment rider is a policy amendment, either temporary or permanent, that excludes coverage for specific medical conditions that might otherwise result in a declined application. By attaching this rider, the insurer can issue coverage while limiting risk, allowing the applicant to obtain a policy they might not otherwise qualify for.
Guaranteed Insurability Rider
This rider, commonly included in disability income and long-term care policies, allows the insured to increase coverage at specified intervals without providing evidence of insurability. It enables the insured to purchase additional benefits regardless of changes in health. The rider typically expires around age 50 and is available for an additional premium.
Multiple Indemnity Rider
This rider enhances a health insurance policy by providing increased benefits for losses resulting from an accident. It may be structured as Double or Triple Indemnity, meaning the policy will pay two or three times the face amount if death or dismemberment occurs within a specified period (commonly 90 days) following the accident. This rider is typically available for an additional premium.
Quiz
1. What is the primary purpose of an Impairment Rider?
A. To increase policy benefits automatically
B. To exclude coverage for specific medical conditions
C. To provide additional accidental death benefits
D. To eliminate premium payments
Correct Answer: B
Rationale: An impairment rider excludes specific conditions, allowing the insurer to issue a policy that might otherwise be declined.
2. Which rider allows an insured to increase coverage without providing evidence of insurability?
A. Impairment Rider
B. Multiple Indemnity Rider
C. Guaranteed Insurability Rider
D. Waiver of Premium Rider
Correct Answer: C
Rationale: The Guaranteed Insurability Rider permits future increases in coverage regardless of changes in the insured’s health.
3. The Guaranteed Insurability Rider typically expires at what approximate age?
A. 40
B. 50
C. 60
D. 65
Correct Answer: B
Rationale: This rider commonly expires around age 50, after which additional coverage cannot be added without underwriting.
4. What type of loss does a Multiple Indemnity Rider primarily cover?
A. Illness-related expenses
B. Routine medical care
C. Accidental death or dismemberment
D. Long-term disability
Correct Answer: C
Rationale: The rider increases benefits specifically for accidental death or dismemberment losses.
5. What does a Triple Indemnity provision provide under a Multiple Indemnity Rider?
A. Three separate policies
B. Three times the premium cost
C. Three times the face amount for covered accidental loss
D. Coverage for three different accidents
Correct Answer: C
Rationale: Triple Indemnity pays three times the policy’s face amount if qualifying accidental loss occurs within the specified timeframe.