Certified Financial Consultant (CFC) Practice Exam

In which scenario is a waiver of premium rider typically utilized?

1. When the insured becomes disabled

2. When the policy is transferred

3. Upon reaching a certain age

4. When a claim is filed

The correct answer is: When the insured becomes disabled

A waiver of premium rider is specifically designed to protect the policyholder in the event of a disability. This rider ensures that if the insured person becomes disabled and is unable to work, they do not have to continue paying premiums on their life insurance policy. Instead, the insurer will waive the premium payments for a specified period or until the insured is no longer disabled or until their death. This feature provides invaluable financial relief during challenging times, allowing the insured to maintain their coverage without any financial burden. Other scenarios, such as transferring a policy, reaching a certain age, or filing a claim, do not involve the same level of financial protection related to the inability to pay premiums due to loss of income from disability. These situations typically have different implications and would not trigger the specific benefits provided by a waiver of premium rider.