Tennessee Insurance Practice Exam

If S purchases a Whole Life policy and dies after 5 years, receiving $10,500 instead of the original $10,000, what rider did S likely include?

1. Waiver of Premium Rider

2. Return of Premium Rider

3. Accidental Death Benefit Rider

4. Cost of Living Rider

The correct answer is: Return of Premium Rider

In the context of the Whole Life policy, the inclusion of a Return of Premium Rider would enable the insured to receive back the premiums they have paid into the policy if they pass away. In this specific scenario, S purchased a policy with a death benefit that is higher than the original premium paid, indicating that an additional benefit was included as part of the rider. The increase to $10,500 implies that S received a return of the premium paid over the initial $10,000 upon death. This rider is designed to ensure that the total premiums paid can be returned or that there's a guaranteed additional payout beyond the base death benefit, particularly in the event of the insured's death within a certain period. The other rider options, while beneficial, do not directly relate to the circumstance of receiving a higher payout upon death related to premium returns. The Waiver of Premium Rider does not affect death benefits; instead, it allows for premiums to be waived under particular conditions. The Accidental Death Benefit Rider provides an additional benefit for death resulting from an accident rather than providing a return of premiums. Lastly, the Cost of Living Rider adjusts the death benefit for inflation purposes but does not involve a direct return of premiums or the structure shown in the scenario.