State RegulationsIL specificDifficulty 2/5
An Illinois insured with a qualifying condition receives an accelerated benefit advance under a life policy rider. What happens to the policy's death benefit?
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
Accelerated benefits under 215 ILCS 5/4 and 50 Ill. Adm. Code 1407 are advances of part of the death benefit while the insured is alive. The advance is subtracted from the death benefit, so the beneficiary receives whatever remains when the insured dies. That reduction is the defining economic feature that distinguishes an accelerated benefit from a loan or a supplemental payment.
Why the other options are wrong
- B) The advance is not supplemental; it is a prepayment drawn against the death benefit, which shrinks accordingly.
- C) The policy is not cancelled; coverage continues with a death benefit reduced by the amount already advanced.
- D) The death benefit does not convert into an annuity; it remains payable to the beneficiary in the reduced amount.
Memory hook
Advance now, subtract later — the death benefit shrinks by what was paid.