Question 2

Cost of living rider allows the policyowner to increase the face amount to adjust for inflation.

The cost of living rider enables the policyowner to increase the face amount of the policy over time to keep pace with inflation, ensuring that the coverage remains adequate as the cost of living rises.

A) Payor benefit.

The payor benefit rider is designed to waive premium payments in the event that the policyowner becomes disabled or dies, protecting the policy for the insured individual, typically a child. It does not address adjustments for inflation or increases in the face amount.

B) Cost of living.

This option is correct as the cost of living rider specifically allows for adjustments to the face amount of a policy in response to inflation, ensuring that the policy benefits maintain their purchasing power over time.

C) Guaranteed insurability.

The guaranteed insurability rider allows the policyowner to purchase additional coverage at specified intervals without providing evidence of insurability. While it offers increased coverage, it is not explicitly tied to inflation adjustments like the cost of living rider.

D) Return of premium.

The return of premium rider provides a refund of the premiums paid if the insured outlives the policy term. It does not pertain to increasing the face amount or adjusting for inflation, making it irrelevant to the question.

Conclusion

The cost of living rider is the definitive choice for adjusting the face amount in response to inflation, as it directly addresses the need for policy coverage to reflect current economic conditions. All other options focus on different aspects of policy benefits and do not provide the specific inflation adjustment feature that the question asks for.