Rhode Island Life Insurance Practice Exam

What benefit does a Term Life rider provide to the insured?

1. Increased cash value

2. Lower premiums

3. Additional life coverage

4. Permanent insurance coverage

The correct answer is: Additional life coverage

A Term Life rider offers additional life coverage to the insured. This means that the policyholder can add a specified amount of term life insurance to their existing life insurance policy, providing extra financial protection during the term of the rider. It is particularly useful for individuals looking to enhance their coverage temporarily, often during specific life stages or events, such as raising children or paying off a mortgage. This additional coverage is generally intended for a predetermined term, after which the rider may expire, but it offers the advantage of increasing the total death benefit during the duration of the rider. By adding this rider, policyholders can address temporary needs without needing to purchase a separate term life policy altogether. Other options suggest benefits that are not typically associated with a Term Life rider. For instance, increased cash value pertains more to permanent life insurance policies. Lower premiums might also lead to confusion, as term insurance is often less expensive than whole life, but the rider itself does not inherently reduce overall premiums. Finally, permanent insurance coverage is distinct from term coverage, designed for lifelong protection rather than a specified term. This distinction highlights why the additional life coverage provided by the Term Life rider is the correct answer.