An insured with a terminal illness wants to access a portion of the life insurance death benefit while still alive. Which policy feature allows this?
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
An accelerated death benefit (ADB) rider allows the insured to receive a portion of the policy's death benefit in advance when diagnosed with a qualifying condition, most commonly a terminal illness with a life expectancy of 12 months or less (other qualifying conditions may include chronic illness). The amount paid is typically a percentage of the face amount, and the death benefit payable at death is reduced by the amount accelerated, net of any processing fee. The feature provides liquidity for medical costs and end-of-life expenses while the insured is alive.
Why the other options are wrong
- B) An accidental death benefit rider pays an additional benefit on accidental death. It does not accelerate funds to a living insured with a terminal illness.
- C) A guaranteed insurability rider allows future purchases of additional coverage without new evidence of insurability. It does not pay benefits to the insured early.
- D) The automatic premium loan provision uses cash value to pay missed premiums. It does not advance any part of the death benefit to the insured while living.
Memory hook
Accelerated death benefit = reach into tomorrow's payout today. Terminal illness turns the death benefit into living cash.