All of the Following Statements About Optional Disability Income Benefits

question 21

Multiple Choice

All of the following statements about optional disability income benefits are true EXCEPT

• A)Under a cost-of-living rider,benefits are periodically adjusted for inflation.
• B)A Social Security rider pays additional benefits if the insured is turned down for Social Security disability benefits.
• C)Adding a return of premium rider results in a lower initial premium.
• D)Under an option to purchase additional insurance,the insured has the right to buy additional insurance at specified times without evidence of insurability.

---

Definitions:

Exercising The Option

The act of buying or selling the underlying asset via the option contract.

Employee Stock Option (ESO)

An option granted to an employee by a company giving the employee the right to buy shares of stock in the company at a fixed price for a fixed time.

European Options

Financial derivatives that give the holder the right, but not the obligation, to buy or sell an underlying asset at a specified price on the expiration date, unlike American options which can be exercised at any time before expiry.

European Options

Options that can only be exercised at the expiration date, not before.