The second death benefit paid by
an accidental death rider
is often equal to the policy's face value — so it effectively doubles the amount paid to the insured person's beneficiaries. (Thus, the name “double indemnity.”)
Which riders increase the amount of the death benefit?
A return of cash value rider
will increase the death benefit of a permanent policy to equal the policy face amount plus the amount of the cash value in the policy. This rider increases the amount the beneficiary will receive if the insured's death is caused by an accident.
What is a rider face amount?
Face value is different from cash value, which is the amount you receive when you surrender your policy, if you have a permanent type of life insurance. Face value is
calculated by adding the death benefit with any rider benefits
, and subtracting any loans you've taken on the policy.
What is a rider on insurance policy?
Riders are
the add-on components of a life insurance policy
that help maximize the policy benefits and coverage. They offer a potent add-on risk cover that provides additional event-based financial protection and can be used to customize your insurance plan based on specific needs.
Which of the following increases the face amount of a policy if the insured dies in an accident?
An accidental death benefit rider
provides an additional amount of insurance if the insured dies as a result of an accident. The additional amount is typically double or triple the amount of the base policy's face value, though modern policies often allow the insured to buy a rider for any multiple of the face value.
What is the advantage of reinstating a policy instead of applying for a new one?
The benefit of reinstating an existing policy rather than applying for a new policy is
that you'll likely pay less
. If your health hasn't changed, your insurer will honor the original pricing on your policy, Ardleigh says. If your health has changed, that could affect your rate (or your insurability).
A waiver of premium rider is an optional insurance policy clause that waives insurance premium payments if
the policyholder becomes critically ill or disabled
. To purchase a waiver of premium rider you may need to meet certain requirements for age and health.
What is the most expensive type of life insurance?
Whole life insurance
is considered to be the most expensive type of life insurance. Its premiums can be as much as five to 10 times more expensive than term life insurance premiums.
What is insurance face amount?
In short, your face value is
the amount of money your beneficiaries will receive from your insurance company at the time of your death
. You might hear it called your death benefit, coverage amount or face amount. So when you buy life insurance, this is what you're paying for.
What are two types of life insurance?
There are two major types of life insurance—
term and whole life
. Whole life is sometimes called permanent life insurance, and it encompasses several subcategories, including traditional whole life, universal life, variable life and variable universal life.
How does a rider become part of an insurance policy?
A rider is an insurance policy
provision that adds benefits to or amends the terms of a basic insurance policy to provide additional coverage
. Riders tailor insurance coverage to meet the needs of the policyholder. Riders come at an extra cost—on top of the premiums an insured party pays.
What is a child rider on an insurance policy?
A child rider is
an add-on to a life insurance policy that pays out a death benefit if one (or more than one) of your children passes away
. This added coverage serves as a safety net for you so you can focus on your family instead of worrying about paying funeral expenses.
What is a rider fee?
Riders are optional and generally are paid for by an automatic shifting of funds from principal into the rider account every year. The charge is
typically about 1% annually
. Some fixed index annuities have zero annual fees for the rider. Some variable annuities have income rider fees as high as 1.5%.
What are the two components of a universal policy?
Universal policy premiums include two components:
the cost of insurance amount and the savings component amount, also known as the cash value
. The cost of insurance (COI) is the minimum amount you must pay to keep your policy active. This amount varies based on your age, health, and insured risk amount.
What is minimum face amount life insurance?
The
minimum death
benefit that an investor may purchase through a variable-life contract. If the company states a minimum face amount, then the investor knows the minimum initial premium will be the amount of money necessary to attain that minimum face amount. …
What type of life insurance policy may automatically increase the face amount of the policy as the Consumer Price Index increases?
The COL rider
provides for automatic increases in the policy death benefit in proportion to increases in the CPI.”
