Life License Qualification Program (LLQP) Practice Exam

How does the Waiver of Premium provision in an Accident and Health policy function?

1. Past due premiums on a lapsed policy are waived and coverage is restored

2. The insured is paid a monthly benefit to keep insurance premiums current in the event of total disability

3. Premiums are waived after the insured has been unemployed for a specified time period

4. Premiums are waived after the insured has been totally disabled for a specified time period

The correct answer is: Premiums are waived after the insured has been totally disabled for a specified time period

The Waiver of Premium provision in an Accident and Health policy is designed to alleviate the financial burden of premium payments for policyholders who experience total disability. Under this provision, once the insured is deemed to be totally disabled for a specified waiting period, the insurer will waive future premium payments for the duration of the disability. This means that the individual does not have to worry about losing their coverage due to an inability to pay premiums during a time when they are unable to earn an income. This provision is particularly valuable because it ensures that the policy remains in force even when the insured is unable to work, thus protecting their financial security and access to future benefits. Total disability typically refers to a condition that prevents the individual from performing the duties of their occupation or any occupation they are reasonably suited for, depending on the terms set by the insurance company. The other options focus on different scenarios that do not accurately represent how the Waiver of Premium works. For example, one option suggests waiving past due premiums on a lapsed policy, which is not aligned with the nature of the Waiver of Premium provision since it only applies to future premiums during a period of total disability. Another option mentions unemployment as a factor, which is generally not a reason for premium waiving