Life Insurance✓ Verified · outline & fact-checked · Sep 2026Difficulty 2/5
An accelerated death benefit for terminal illness allows the insured to:
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Answer & full 3-part explanation (select an option above, or peek)
Why B is correct
An accelerated death benefit, also called a living needs benefit, permits the insured to receive part of the policy's death benefit while living, typically upon a terminal illness diagnosis with a limited life expectancy. The amount paid reduces the eventual death benefit payable to beneficiaries. It is not a loan, and any amounts already received are subtracted from what the beneficiary later receives, so the insured is spending down the policy's death proceeds early.
Why the other options are wrong
- A) Accelerated benefits are payments, not loans; the face amount is reduced rather than borrowed with an obligation to repay.
- C) Conversion to an annuity is a separate policy feature and is not part of the accelerated death benefit.
- D) Transferring ownership is a different transaction governed by assignment rules; accelerated benefits are about receiving living proceeds.
Memory hook
Terminal diagnosis? Tap the death benefit early — what you take out, your heirs do not get.