Question 1

Cost-of-living rider increases the death benefit annually without medical evidence.

The cost-of-living rider is designed to increase the death benefit over time to keep pace with inflation, and this adjustment occurs automatically without the need for medical evidence.

A) Cost-of-living rider

This option is correct as the cost-of-living rider specifically allows for annual increases in the death benefit based on inflation indices, ensuring the policyholder’s benefit retains its purchasing power without requiring any additional medical underwriting.

B) Return of premium rider

The return of premium rider provides a refund of premiums paid if the insured outlives the term of the policy. While it offers a financial benefit, it does not increase the death benefit annually nor does it relate to medical evidence.

C) Accidental death rider

An accidental death rider provides an additional benefit if the insured dies due to an accident. This rider does not increase the death benefit annually and is contingent upon the cause of death, making it unrelated to the question.

D) Guaranteed purchase option

The guaranteed purchase option allows the policyholder to increase their coverage at specified times without medical evidence, but it does not automatically increase the death benefit annually. Thus, it does not fulfill the criteria set by the question.

Conclusion

The cost-of-living rider is the only option that directly addresses the annual increase in death benefits without requiring medical evidence, making it the definitive correct answer. All other options either do not provide annual increases or are conditional based on specific circumstances, thereby failing to meet the question's criteria.