Life Policy ProvisionsQuestion 564 of 716
A cost-of-living (COLA) rider on a life policy increases the:
a.The guaranteed interest rate credited to the policy's cash value, raising that rate each year to match inflation
b.Dividend scale on a participating policy
c.Premium only, with no change to any benefit
d.Death benefit periodically to offset inflation, usually tied to an index
Explanation
A COLA rider raises the death benefit over time, often linked to an inflation index, so protection keeps pace with rising costs. It is not merely a premium increase, nor does it change the guaranteed interest or dividend scale.
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Related questions on this topic
- Adding a level term rider to a whole life policy lets the owner:
- An accelerated (living) death benefit rider allows the insured to receive part of the death benefit while still alive if the insured:
- A long-term care rider attached to a life insurance policy generally:
- Under the extended term nonforfeiture option, the policy's cash value is used to:
- The reduced paid-up nonforfeiture option provides:
- The automatic premium loan provision prevents a policy from lapsing by:
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PrepPass team · Verified against California Life & Health Insurance License Exam · How we review
Reviewed by John Zihao Zhang — California-Licensed Life Insurance Agent (CA Dept. of Insurance License #4396095 — verify)