California Life and Health Insurance Practice Exam

What provision allows Bruce's insurance policy to remain in force after he becomes totally and permanently disabled?

1. Conversion privilege

2. Waiver of premium provision

3. Accidental death benefit

4. Extended term insurance

The correct answer is: Waiver of premium provision

The waiver of premium provision is designed to protect policyholders like Bruce in the event they become totally and permanently disabled. This provision stipulates that if the insured is unable to work due to disability, the insurance company will waive the requirement to pay premiums while the insured is disabled, allowing the policy to remain active without the need for payments. This feature is particularly valuable as it ensures continued coverage during times of financial difficulty caused by a total and permanent disability. In contrast, the other options serve different purposes. The conversion privilege allows a policyholder to convert a term policy to a permanent policy without undergoing further medical underwriting, which is helpful at the end of a term policy but does not address the situation of maintaining coverage during a disability. The accidental death benefit offers extra coverage in case of death due to an accident, which is unrelated to the preservation of the policy during disability. Extended term insurance is a non-forfeiture option that allows a policy to continue for a specific period without further premium payments, but it does not specifically cater to the scenario of total and permanent disability.