Life Insurance✓ Verified · outline & fact-checked · Sep 2026Difficulty 1/5
A cost of living adjustment (COLA) rider on a life insurance policy is designed to:
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
A COLA rider increases the death benefit periodically, usually annually, based on a measure of inflation such as the Consumer Price Index (CPI), so the coverage keeps pace with rising costs and purchasing power. The additional coverage is typically offered at standard rates without new evidence of insurability. It protects the real value of the death benefit over the long policy duration.
Why the other options are wrong
- B) Premiums rise only to pay for the added coverage, subject to policy terms; the rider does not allow unlimited premium increases.
- C) COLA adjusts the death benefit for inflation; it does not convert the policy to term coverage.
- D) The rider increases the benefit, not decreases it, and does so to offset inflation, not aging.
Memory hook
COLA rider = inflation-proof your death benefit; as prices rise, so does the payout.