S is covered by a whole life policy. Which insurance product can cover his children? A Assignment provision B Payor benefit C Accelerated benefit rider D Child term rider
The Correct Answer and Explanation is :
The correct answer is D: Child term rider.
A Child Term Rider is an additional provision that can be added to a whole life insurance policy to provide coverage for the policyholder’s children. This rider allows the policyholder to add life insurance coverage for each of their children, typically for a low cost. The coverage is usually a term life insurance policy that provides a death benefit if the child passes away during the term period, which typically ends when the child reaches a certain age (e.g., 18 or 21 years old).
Here’s an explanation of the options:
- A: Assignment provision
The assignment provision allows the policyholder to transfer ownership of the policy to another person or entity. However, this doesn’t provide any specific coverage for children. The assignment is typically used in cases where the policyholder wants to designate someone else to receive the benefits or assume control of the policy, but it does not add life insurance coverage for children. - B: Payor benefit
The payor benefit rider is designed to ensure that the policy continues to be in force if the policyholder becomes disabled or dies. It typically applies to juvenile policies, where a parent or guardian agrees to pay premiums on behalf of a child. If the payor becomes disabled or passes away, the insurance company waives the premium payments. However, it does not provide specific life insurance coverage for the children. - C: Accelerated benefit rider
An accelerated benefit rider allows the policyholder to access part of their death benefit if they become terminally ill or face a qualifying medical condition. This rider is typically added to a life insurance policy to provide financial support in the event of a serious illness. It does not cover children specifically. - D: Child term rider
This rider is specifically designed to provide life insurance coverage for the policyholder’s children, typically at a low cost. The coverage is temporary (term), and it automatically converts to permanent insurance when the child reaches a certain age, often without needing to provide evidence of insurability.
Thus, the Child Term Rider is the best option for providing life insurance coverage for S’s children.