Certified Financial Consultant (CFC) Practice Exam

What is the main function of living benefits riders in a life insurance policy?

1. Provide investment options for policyholders

2. Pay part of the policy death benefit to insureds for long-term care

3. Incrementally increase the policy's face amount over time

4. Offer discounts on premiums for healthy living

The correct answer is: Pay part of the policy death benefit to insureds for long-term care

The main function of living benefits riders in a life insurance policy is to allow policyholders to access part of their death benefit while they are still alive, specifically for critical illnesses or long-term care needs. This feature is particularly valuable because it provides financial support to the insured when they may be facing significant medical expenses or a loss of income due to health issues. By enabling access to funds before death, living benefits riders can help alleviate some of the financial burdens associated with serious health conditions, allowing individuals to cover costs like medical treatment, in-home care, or other necessary expenses. This is why option B accurately captures the essence of living benefits riders within life insurance policies. In contrast to functions like offering investment options or increasing the face amount of the policy, the primary goal of these riders is to provide immediate financial assistance to the insured during challenging times, reflecting a more practical application of life insurance beyond just providing a death benefit to beneficiaries.