Certified Financial Consultant (CFC) Practice Exam

If a life insurance policy allows the owner to make periodic additions to the face amount without proving insurability, this policy includes a:

1. Policy acceleration rider

2. Guaranteed insurability rider

3. Premium waiver rider

4. Conversion option

The correct answer is: Guaranteed insurability rider

The correct answer is the guaranteed insurability rider. This feature allows the policyholder to increase the face amount of the life insurance policy at designated times without having to provide evidence of insurability, such as undergoing medical examinations or submitting health information. This is particularly beneficial because it enables individuals to secure higher coverage as their needs change over time, such as during significant life events like marriage or having children, without the fear that their health status may prevent them from obtaining additional coverage. The other options represent different features not related to periodic additions to the face amount. A policy acceleration rider typically allows the policyholder to access benefits early, usually in the event of a terminal illness, while a premium waiver rider waives premiums if the policyholder becomes totally disabled. The conversion option grants the ability to convert a term life insurance policy into a permanent policy, but it does not relate to adding to the original face amount without proving insurability.