Oklahoma Life Producer Practice Exam

In a Return of Premium rider, what type of insurance is utilized to cover premiums paid up to the time of death?

1. Whole Life Insurance

2. Growing Term Insurance

3. Increasing Term Insurance

4. Decreasing Term Insurance

The correct answer is: Increasing Term Insurance

The Return of Premium rider is typically associated with a term life insurance policy, particularly in the context of providing a death benefit that includes a refund of paid premiums if the insured passes away before the term ends. This rider essentially allows for the collection of premiums paid during the coverage period to be returned to the beneficiary, in addition to the death benefit, if the insured dies during the term. When examining the types of term insurance mentioned, increasing term insurance is designed to provide a death benefit that grows over time, which aligns well with the intent of a Return of Premium rider. This type of policy has a death benefit that increases periodically, which can mirror the increasing dollar amount of premiums refunded. The increasing benefit could represent an additional payout during the term and serve as an incentive for policyholders who may be worried about inflation or increasing needs over time. This rider enhances the appeal of life insurance by ensuring that the premiums paid do not go to waste if the insured dies during the term, providing peace of mind to policyholders.