PSI Ohio Insurance Practice Exam

How are term riders typically used in insurance?

1. To increase the death benefit

2. To purchase insurance on a family member of the originally insured

3. To decrease premiums

4. To convert term insurance to whole life

The correct answer is: To purchase insurance on a family member of the originally insured

Term riders are additional features attached to a life insurance policy that enable the policyholder to extend coverage under specific circumstances. In this context, a common use of term riders is to allow the policyholder to purchase insurance on a family member of the originally insured. This approach offers flexibility for families, allowing individuals to ensure that their loved ones are financially protected without needing to take out an entirely separate policy. For instance, if a parent holds a life insurance policy, they can add a term rider to include coverage for their spouse or children, which can simplify the management of multiple policies and provide necessary coverage with potentially minimal underwriting requirements. The other options typically do not align with the primary purpose of term riders. Increasing the death benefit or converting term insurance to whole life more commonly involves riders specific to those functions but do not represent the standard usage of term riders. Decreasing premiums usually relates to other types of policy adjustments or endorsements beyond term riders.