Colorado Life Producer License Practice Test

What is the function of the accidental death and dismemberment rider?

1. Pays a fixed sum for dismemberment only

2. Pays double the face amount for accidental death

3. Pays a percentage for dismemberment and the face amount for death

4. Pays only when death occurs during a specific time frame

The correct answer is: Pays a percentage for dismemberment and the face amount for death

The function of the accidental death and dismemberment rider is to provide benefits in the event of both accidental death and dismemberment. This rider specifically pays out a percentage of the policy's face amount for dismemberment, which can include the loss of limbs or other injuries caused by accidents. Additionally, it pays the full face amount of the policy if the insured person dies from an accident. This design gives policyholders added financial security by covering two different types of risks under one rider. In situations where an accident leads to dismemberment, the insured receives a payout that can help cover medical expenses or loss of income. If the accident results in death, the full coverage amount is then available to beneficiaries. This dual protection makes the rider a valuable addition to a life insurance policy, as it addresses both severe outcomes of accidents: death and dismemberment. Other options do not encompass this range of benefits; for instance, some only cover death or either dismemberment exclusively without providing a comprehensive payout in cases of accidental death. Thus, the selection that includes both scenarios accurately highlights the important functions of the accidental death and dismemberment rider.