South Carolina Life Insurance Practice Exam

What is true about the signed waiver of premium?

1. It can only be used in term policies

2. It is a legal document confirming initial coverage

3. It specifies conditions under which premiums are waived

4. It is not required in any policy

The correct answer is: It specifies conditions under which premiums are waived

The signed waiver of premium is a provision that indicates certain conditions under which the insurance company agrees to waive the premium payments due on a policy, typically in cases where the policyholder becomes seriously ill or disabled. This waiver allows the policyholder to maintain their coverage without having to make premium payments during the specified period. This provision is often included in various types of life insurance policies, not just limited to term policies, which makes it relevant to a broader category of life insurance products. It provides significant peace of mind for policyholders facing financial difficulties due to health issues, ensuring that their coverage remains in force even when they are unable to pay premiums. The other options presented do not correctly define the waiver of premium provision. The waiver is not specifically just for confirming initial coverage, nor is it a legal document in that sense. It is also not true that it is not required in any policy; while it may not be mandatory, it often is an important feature included in many life insurance policies.