Utah Life Producer Practice Exam

What type of insurance would cover a Return of Premium rider?

1. Decreasing term insurance

2. Increasing term insurance

3. Whole life insurance

4. Universal life insurance

The correct answer is: Increasing term insurance

A Return of Premium rider is typically associated with term life insurance, specifically enhancing the coverage by allowing for the return of premiums paid if the insured outlives the term of the policy. This feature is designed to provide added value to term insurance, appealing to individuals who may be concerned about paying for coverage that may never pay out if they do not pass away during the term. Increasing term insurance, where the death benefit increases over time, can indeed have a Return of Premium rider, which benefits the policyholder if they maintain the policy until its expiration. In essence, if you choose a policy with a Return of Premium rider, you benefit by receiving your premiums back if you outlive the term; this is a significant incentive for many consumers. In contrast, while whole life insurance and universal life insurance typically focus on providing lifelong coverage and building cash value, they do not normally have a Return of Premium rider, as the structure and purpose of these types of insurance are fundamentally different, focusing more on long-term savings and investment rather than the temporary coverage of term products. Decreasing term insurance, which decreases in coverage over time, also does not typically include this rider. Therefore, the association of a Return of Premium rider specifically with increasing term insurance is