Question

A mother with a teenage sonpurchases a life policy on his life. Thepolicy includes an optional ridercalled the Payor Benefit. What willhappen to the policy if the mother diesor is disabled?Choose one answer.

a. The policy would most likely lapse
b. The amount of coverage is reducedas the policy is paid up
c. The premiums on the son's policywould be waived until the son reachesa specified age
d. The premiums would be suspendedand later paid back by the son

Answer 1

Answer:

The correct answer is - option C.

Explanation:

In the Third-party policies, The Payor Benefit Rider p[olicy is used in which the person insured and ower of the policy are not his/themself. The insurer will not lapse and continue it as if the buyer still paying for the premium payments for the policy.

In this case, the mother is the owner and the son is insured and she includes the Rider in the payor benefit, so if the mother becomes disabled or died the premium of the policy would be waived until the son reaches a particular age.

Thus, the correct answer is - option C.