Which rider allows the policyholder to adjust the death benefit after certain conditions are met?

Which rider allows the policyholder to adjust the death benefit after certain conditions are met?

• A. Adjustable benefit rider
• B. Return of premium rider
• C. Accidental death benefit rider
• D. Cost of living rider

Answer: (D)

The cost of living rider enables the policyholder to adjust the death benefit in response to inflation, ensuring that the coverage remains adequate over time. This rider typically provides for an automatic increase in the policy's death benefit based on a specific index or percentage, often related to the Consumer Price Index (CPI) or other inflation indicators. This adjustment helps the policyholder maintain the purchasing power of the death benefit as the cost of living increases, thus providing greater financial security for the beneficiaries when the policyholder passes away. Over time, as the economy fluctuates and the cost of living rises, the initial death benefit may become insufficient. The cost of living rider addresses this issue by allowing for increases in the benefit amount without requiring new underwriting or a new policy purchase, as long as certain conditions specified in the rider are met. Other riders, such as the adjustable benefit rider, return of premium rider, and accidental death benefit rider, serve different purposes and do not specifically relate to adjusting the death benefit based on inflation or cost of living changes.

The cost of living rider enables the policyholder to adjust the death benefit in response to inflation, ensuring that the coverage remains adequate over time. This rider typically provides for an automatic increase in the policy's death benefit based on a specific index or percentage, often related to the Consumer Price Index (CPI) or other inflation indicators.

This adjustment helps the policyholder maintain the purchasing power of the death benefit as the cost of living increases, thus providing greater financial security for the beneficiaries when the policyholder passes away. Over time, as the economy fluctuates and the cost of living rises, the initial death benefit may become insufficient. The cost of living rider addresses this issue by allowing for increases in the benefit amount without requiring new underwriting or a new policy purchase, as long as certain conditions specified in the rider are met.

Other riders, such as the adjustable benefit rider, return of premium rider, and accidental death benefit rider, serve different purposes and do not specifically relate to adjusting the death benefit based on inflation or cost of living changes.