State RegulationsMI specificDifficulty 3/5
A policyowner receives an accelerated death benefit payment. When the insured later dies, the beneficiary receives:
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Answer & full 3-part explanation (select an option above, or peek)
Why C is correct
Under Michigan's living benefit provisions (M.C.L. 500.3928, M.C.L. 500.3949), an accelerated benefit is an advance against the death benefit. The death benefit is reduced by the amount paid, and riders commonly further reduce it by interest accrued on the advance and administrative charges imposed when the benefit is accelerated. The beneficiary receives whatever remains — which is exactly why candidates should view the accelerated payment as spending the death benefit early, not as extra money.
Why the other options are wrong
- A) Additive payment contradicts the acceleration design; the advance comes out of the death benefit rather than supplementing it.
- B) The policy does not automatically terminate; any remaining death benefit stays payable after the advance.
- D) Premium refund is not the settlement mechanism — the remaining contractual death benefit, net of the advance and any rider charges, is what is paid.
Memory hook
Advance now, subtract later — plus any interest the rider charges.