LLQP Life Insurance · Component 2.2 · 30% of the exam
A term rider on a permanent policy is used to:
- AReduce the permanent policy's premium by spreading the insurer's costs over a larger total face amount
- BEliminate the contestability period on the base policy, since the rider is underwritten separately
- CConvert the permanent policy to term for a period, so the client pays a lower premium while cash is tight
- Add temporary coverage on the insured, or on a spouse or children, at lower cost than separate policies
Correct answer: D) Add temporary coverage on the insured, or on a spouse or children, at lower cost than separate policies
Term riders layer temporary coverage on a permanent base — the classic solution to a large temporary need plus a small permanent need — and family riders extend modest coverage to a spouse and children under one contract.
Why the other options are wrong
- ARiders add cost; they do not reduce the base premium.
- BRiders have no effect on the contestability period.
- CA term rider adds term coverage; it does not convert the base policy.
Exam tip
Term riders layer temporary coverage on a permanent base and can extend modest coverage to family members under one contract.
Common mistake
Forgetting that a rider ends if the base policy ends.
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.