Connecticut Life Producer Practice exam

What is the benefit of a Return of Premium rider?

1. Waives premium payments in case of disability

2. Provides cash value accumulation

3. Pays back all premiums in addition to the death benefit

4. Offers a one-time cash payment upon policy lapse

The correct answer is: Pays back all premiums in addition to the death benefit

The benefit of a Return of Premium rider is that it enhances a life insurance policy by ensuring that if the insured person outlives the term of the policy, they receive back all the premiums paid, in addition to the death benefit. This feature offers a sense of financial security and can be a significant incentive for individuals who are concerned about the potential loss of premium payments if they do not pass away during the term. The Return of Premium rider essentially provides a safety net, as it not only serves the primary function of life insurance—providing a death benefit—but also guarantees that the policyholder will not lose their invested premiums if they survive the term. This is appealing in life insurance as it adds an element of savings to the insurance coverage. Other options, while valid in different contexts, do not accurately reflect the function of a Return of Premium rider. For instance, waiving premium payments in case of disability pertains to a rider that provides premium waiver benefits, which is different from the return of premiums. Similarly, while cash value accumulation is a characteristic of whole life policies or similar products, it does not relate to the concept of returning premiums specifically. Lastly, a one-time cash payment upon policy lapse pertains to the policy's surrender value, which is not