Rhode Island Life Insurance Practice Exam

What is the role of a decreasing term rider in a whole life policy?

1. Adds an additional cash value

2. Provides temporary additional death benefit

3. Reduces the premium cost

4. Increases the policy's face amount

The correct answer is: Provides temporary additional death benefit

A decreasing term rider in a whole life policy serves the purpose of providing a temporary additional death benefit that diminishes over time. This rider can be particularly useful for policyholders who want to address specific financial needs that are expected to decrease, such as a mortgage balance or other debts that will reduce as they are paid off. As the term progresses, the coverage amount provided by the rider decreases, typically in alignment with the financial obligation it is meant to cover. This allows policyholders to have a higher level of protection during a critical period without permanently increasing their whole life policy's face amount. This type of rider is advantageous because it allows for flexibility in coverage while keeping the whole life policy intact. Additionally, while it can provide additional coverage, it does not add cash value to the whole life policy, reduce premium costs, or increase the total face amount of the policy, setting it apart from other types of riders or policy features.