Life Insurance✓ Verified · outline & fact-checked · Sep 2026Difficulty 1/5
The primary purpose of a cost-of-living adjustment (COLA) rider on a life insurance policy is to:
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
A COLA rider automatically increases the policy's death benefit at intervals to keep pace with inflation, so the coverage's purchasing power is preserved over time. The increases are usually tied to an inflation index and may require additional premium or be limited in amount. This rider is one of the life policy riders in objective LIFE-III.1d.
Why the other options are wrong
- B) The COLA rider adjusts the death benefit, not the cash value's interest rate.
- C) COLA increases coverage; it does not reduce premiums with age.
- D) Nursing home coverage would come from a long-term care rider, not a COLA rider.
Memory hook
COLA rider = the death benefit that grows with the price of bread.