G purchased a Family Income policy at age 40, The policy has a 20-year rider period. If G were to die at age 50, how long would G’s family receive an income?
A)5 years
B)10 years
C)20 years
D)15 years
The Correct Answer and Explanation is :
To determine how long G’s family would receive an income from the Family Income policy if G died at age 50, we first need to understand how such a policy typically works.
A Family Income policy is designed to provide a regular income to the policyholder’s beneficiaries in the event of the policyholder’s death, usually over a specified period. In this scenario, G purchased the policy at age 40 with a 20-year rider period. This means that the income benefit is designed to last for 20 years from the start of the rider period.
Since G bought the policy at age 40 and the rider period is 20 years, the income benefit would extend until G turns 60 (age 40 + 20 years). If G dies at age 50, there are still 10 years remaining in the rider period (from age 50 to age 60). Therefore, G’s family would receive an income for those remaining years.
The answer is B) 10 years.
Explanation
When G purchased the Family Income policy, the intention was to provide financial protection to their family in case of untimely death. The policy stipulates a rider period, which in this case lasts for 20 years. This rider period defines the duration for which the family will receive regular income payments.
If G dies at age 50, they have already utilized 10 years of the rider period (from age 40 to age 50). Given that the total rider period is 20 years, the family is entitled to receive income for the remaining duration, which is 10 years (from age 50 to age 60).
Thus, the policy effectively ensures that even in the event of G’s passing, the family has a financial safety net for a significant period. This type of coverage is particularly valuable as it allows families to maintain their standard of living and cover essential expenses during a challenging time. The clarity of the policy terms makes it crucial for policyholders to understand the implications of their coverage, ensuring that they and their families are adequately protected.