Policy Riders, Provisions, Options, and Exclusions
A cost of living rider is attached to a life policy. What does it do as an inflation index rises?
Answer and explanation
Answer: A. A cost of living rider periodically raises the face amount in step with a published inflation index. The increases are issued without new underwriting, though the premium rises with the added coverage.Source: NAIC Life Insurance Buyer's Guide — Riders: cost of living adjustment of the face amount
More policy riders, provisions, options, and exclusions questions
- What is the function of a payor benefit rider attached to a juvenile life insurance policy?
- What is the main purpose of a life policy's free-look period?
- What is the primary operational objective of an automatic premium loan (APL) provision?
- What restriction applies to an owner who names an irrevocable beneficiary?
- What right does a guaranteed insurability rider (GIR) grant to the policyowner?
- What standard requirements must a policyowner satisfy to reinstate a lapsed life insurance policy?
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