Alabama Life and Health Insurance State Practice Exam

A term rider is a provision that can be attached to a permanent life insurance policy, providing additional temporary coverage. This rider adds a specified amount of term life insurance, which is essentially a policy that lasts for a limited time. The term rider is particularly beneficial for policyholders who may need more coverage for a specific period, such as while raising children or paying off a mortgage.

This added coverage can help meet short-term financial needs without significantly raising the premium of the permanent policy itself. It allows policyholders to maintain lower permanent policy premiums while having the flexibility to acquire additional temporary coverage suited to their current needs.

In contrast, other riders like the accidental death rider provide benefits specifically in the case of accidental death, the waiver of premium rider maintains the policy without requiring premium payments during the insured's disability, and the disability income rider provides a stream of income if the policyholder becomes disabled. None of these options offer the temporary coverage aspect that the term rider does, making it uniquely suited for this specific need.