QQuestionBusiness Management
QuestionBusiness Management
A Cost of Living rider gives the insured
A. tax incentives
B. monthly income
C. decreasing premiums
D. additional death benefits
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Answer
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Step 1:Let me solve this problem systematically:
Step 2:: Understand the Key Terms
A Cost of Living rider is a specific insurance policy feature designed to help protect the policyholder's benefits against inflation.
Step 3:: Analyze the Options
A. Tax incentives - This is incorrect. A Cost of Living rider does not provide tax benefits. B. Monthly income - This is incorrect. The rider does not generate direct monthly income. C. Decreasing premiums - This is incorrect. The rider does not reduce premium payments. D. Additional death benefits - This is the correct answer.
Step 4:: Explain the Correct Answer
A Cost of Living rider typically increases the death benefit over time to help maintain the policy's real value against inflation. This means the death benefit grows automatically, usually at a predetermined rate, to help ensure that the beneficiary receives a meaningful payout that keeps pace with rising living costs.
Final Answer
Additional death benefits Key Insight: The Cost of Living rider is designed to protect the real value of the insurance benefit by providing incremental increases to the death benefit, helping to offset the erosive effects of inflation over time.
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