Rhode Island Life Insurance Practice Exam

Which rider can increase the death benefit to help keep pace with inflation?

1. Waiver of Premium Rider

2. Guaranteed Insurability Rider

3. Cost of Living Rider

4. Accidental Death Benefit Rider

The correct answer is: Cost of Living Rider

The choice of the Cost of Living Rider is correct because this rider directly addresses the impact of inflation on the death benefit of a life insurance policy. This rider allows for periodic increases in the death benefit amount, which helps ensure that the value of the policy remains relevant and sufficient over time, especially as the cost of living rises due to inflation. By adjusting the death benefit, policymakers can offer reassurance that the initial coverage amount will not lose its purchasing power. The other options serve different purposes and do not specifically relate to keeping pace with inflation. The Waiver of Premium Rider provides benefits during times when the policyholder cannot pay premiums due to disability but does not affect the death benefit directly. The Guaranteed Insurability Rider allows policyholders to purchase additional coverage at future dates without needing to provide evidence of insurability but does not offer ongoing increases to the benefit based on inflation. The Accidental Death Benefit Rider, meanwhile, provides an additional payout if death occurs due to an accident, thereby not addressing the adjustments needed for inflation.