What can happen to the cost of a policy with a Cost of Living Rider?

A Cost of Living Rider is an additional benefit that can be attached to a life insurance policy, allowing the death benefit to increase over time to keep pace with inflation, as measured by the Consumer Price Index (CPI).

When this rider is included, the cost of the policy can increase because the insurer adjusts the premium to reflect the rising cost of providing benefits that align with inflation rates. Essentially, the insurer needs to ensure that the policy remains financially viable while offering increased coverage to match the growing cost of living.

This means that policyholders may see an increase in their premiums over time, particularly as the benefits of the rider activate and adjustments are made. Consequently, the correct interpretation of what can happen to the cost of a policy with a Cost of Living Rider includes the reality that the cost of the policy can indeed go up as the benefits increase.