LLQP Life Insurance · Component 2.2 · 30% of the exam
A paid-up additions rider on a participating whole life policy lets the policyholder:
- AConvert the participating policy to universal life without evidence, keeping the original issue age and the accumulated dividends
- Make additional payments that buy paid-up insurance, increasing death benefit and cash value faster than dividends alone
- CReduce the face amount in stages while keeping the premium level, so the policy builds cash value faster
- DSkip premiums in years when cash is tight, with the paid-up additions covering the missed amount
Correct answer: B) Make additional payments that buy paid-up insurance, increasing death benefit and cash value faster than dividends alone
The PUA rider is the whole-life equivalent of extra deposits in UL: it accelerates cash-value growth within the policy's exempt room. It is a savings-oriented rider for clients who want to overfund a par policy.
Why the other options are wrong
- AThe rider does not convert the policy to UL.
- CIt increases, not reduces, the face amount.
- DPUA riders involve paying more, not skipping premiums.
Exam tip
PUA rider = extra deposits buying paid-up insurance; faster cash value and death benefit growth within the exempt room.
Common mistake
Confusing the paid-up additions dividend option with the paid-up additions rider.
What this tests
CISRO competency component 2.2 — Analyze the available products that meet the client's needs — which is weighted at 30% of the Life Insurance module. Written against the published curriculum.
More from component 2
- A client has a need lasting about twenty years and compares a ten-year and a twenty-year term policy. The main point to explain is that:
- A client exercises the conversion privilege on his term policy. The permanent premium will be based on:
- A client notices that a small policy costs proportionately more per unit of coverage than a larger one. The explanation is that:
- A client wants to pay monthly rather than annually. The agent should explain that monthly payment:
- A client asks why dividends from her participating policy are not taxed like interest from a bank. The reason is that a dividend is:
- A universal life policyholder is choosing among the investment options inside her policy. She should understand that:
Practice the whole Life Insurance module
Timed sets weighted like the exam, and review of every question you miss. Free to start.