What is a payor benefit rider?
A payor benefit rider is attached to a juvenile life insurance policy. If the adult who pays the premiums dies or becomes disabled, the insurer waives the premiums until the child reaches a set age, often 21.
Key facts for the exam
- It waives the juvenile policy's premiums if the premium-paying adult dies or becomes disabled, until the child reaches the age stated in the rider (for example, 21).
- It does not pay the child's death benefit because the payor dies. It waives the premiums that follow, subject to the rider's terms.
- The payor does not have to be a parent: if a grandparent who pays the premiums dies, future premiums are waived until the grandchild reaches the rider's age.
- Juvenile policies are usually bought to cover final expenses and to lock in insurability while the child is young and premiums are low.
The trap. The rider protects the child's policy, not the payor's family. It stops the premiums; it does not pay cash when the payor dies.
How the exam asks about it
- What is the function of a payor benefit rider attached to a juvenile life insurance policy?
- A grandparent buys a juvenile life policy on a 5-year-old grandchild with a payor benefit rider. The grandparent dies 3 years later. What occurs regarding policy premiums?
- A parent pays premiums on a juvenile life policy and dies before the insured child reaches majority. If the policy has a payor benefit rider and its conditions are met, what happens next?
- What are the usual purposes of buying a modest policy on the life of a minor?
Where it sits on your state's exam
| State exam | Share of exam | ≈ Scored questions | Outline section |
|---|---|---|---|
| Texas | 19% | 15 of 80 | Policy Riders, Provisions, Options, and Exclusions |
| Florida | 18% | 15 of 85 | Policy Riders, Provisions, Options, and Exclusions |
| Georgia | 19% | 15 of 80 | Policy Riders, Provisions, Options, and Exclusions |
| New York | 20% | 20 of 100 | Life Insurance Policy Provisions, Options, and Riders |