West Virginia State Life Insurance Practice Exam

What provision allows a father who dies within 3 years after purchasing a life insurance policy on his infant daughter to have the policy premiums waived?

1. Beneficiary provision

2. Payor provision

3. Rider provision

4. Waiver of premium

The correct answer is: Payor provision

The correct answer is the payor provision, which is specifically designed to address situations where an adult, often a parent, takes out a life insurance policy on a minor. This provision ensures that if the adult passes away before the child reaches a certain age (such as 18), the insurance company will waive the premiums due on the policy for a specified period (in this case, the first few years of the policy). This is particularly advantageous because it allows the policy to remain in force without the burden of premium payments, ensuring that the policy's value is preserved for the child’s future. The payor provision recognizes the importance of maintaining coverage for the dependent child, illustrating the support mechanism it provides to families facing unexpected losses. Other provisions or riders mentioned, like the beneficiary provision or waiver of premium, do not directly fulfill the same role as the payor provision. The beneficiary provision simply outlines who will receive the death benefit and does not address premium payments. Meanwhile, the waiver of premium generally applies in scenarios where the insured becomes disabled and unable to pay premiums rather than specifically addressing the situation of a parent's death affecting a minor child.