Question

Which of the following is usually sold as a cost-of-living rider to another policy?

A. Accelerated death benefit rider
B. Payor benefit rider
C. Guaranteed insurability rider
D. Cost-of-living rider

Answer 1

The cost-of-living rider is added to a life insurance policy to adjust the coverage for inflation and is the right answer (D) to the question. This rider ensures the death benefit reflects the rising cost of living, different from the policy's cash value that serves as an account.

Step-by-step explanation:

The cost-of-living rider is typically offered as an additional feature, or rider, to a life insurance policy, such as cash-value (whole) life insurance. This type of rider is designed to adjust the benefit of the policy to help keep pace with inflation and increases in the cost of living, ensuring the value of the insurance coverage does not diminish over time. Of the options provided, D. Cost-of-living rider is what is usually sold as a cost-of-living rider to another policy. It works by increasing the policy's death benefit, which contrasts with the cash value component that can act as an account for the policyholder's use.