Massachusetts Life Producer Practice Exam

A life insurance policy that includes a return of premium rider will pay the beneficiary how much upon the insured's death?

1. Total premiums paid plus the policy face amount

2. Only the premiums paid

3. The policy face amount only

4. The cash value at the time of death

The correct answer is: Total premiums paid plus the policy face amount

A life insurance policy with a return of premium rider is designed to provide an additional benefit to the policyholder or their beneficiaries. When the insured passes away, the return of premium feature means that the policy not only pays out the policy’s face amount but also returns the total premiums that the policyholder paid during the life of the policy. This rider is appealing because it adds a sense of security, allowing the policyholder to feel that their premiums will not be entirely lost if they outlive the policy term or if they pass away. As a result, upon the insured’s death, the beneficiary will receive both the face amount of the policy and the total premiums that were paid, effectively maximizing the benefits received. This structure provides a greater incentive for the insured to maintain the policy, as it ensures that they or their beneficiaries will receive a tangible financial benefit regardless of when the death occurs. Thus, the correct answer reflects the combined total of the premiums paid plus the face amount of the policy.