Oklahoma Life Producer Practice Exam

What type of rider ensures that a whole life policy accumulates value based on premiums paid?

1. Return of Premium Rider

2. Cash Value Rider

3. Accelerated Death Benefit Rider

4. Waiver of Premium Rider

The correct answer is: Return of Premium Rider

The rider that ensures a whole life policy accumulates value based on premiums paid is the Cash Value Rider. This rider is specifically designed to enhance the benefits of a whole life insurance policy by allowing the policyholder to accumulate a cash value over time. Whole life insurance itself includes a savings component, where a portion of the premiums paid is set aside to build cash value. This cash value grows at a guaranteed rate and can be accessed by the policyholder during their lifetime, providing additional financial flexibility. The Return of Premium Rider, on the other hand, is intended for term life insurance policies and allows the insured to receive back the premiums paid if they outlive the policy term, but it does not impact cash value accumulation. The Accelerated Death Benefit Rider allows policyholders to access some benefits while alive under certain circumstances, such as terminal illness, but does not relate to the accumulation of cash value. Lastly, the Waiver of Premium Rider ensures that premiums are waived if the insured becomes disabled, but it also does not influence the accumulation of cash value. Understanding the purpose and functionality of the Cash Value Rider is crucial for recognizing how whole life insurance policies can provide both life insurance protection and a saving component that grows over time.