Under Accelerated Death Benefit/Living Benefits Rider, what happens if diagnosed with a terminal illness?

• A. The insurer pays a percentage of the death benefit while the insured is alive, and the death benefit is reduced by the amount paid.
• B. The policy automatically terminates with no payout.
• C. The insurer waives all future premiums but leaves death benefit unchanged.
• D. The rider guarantees a fixed additional benefit regardless of policy death benefit.

Answer: (A)

When a terminal illness is diagnosed under an Accelerated Death Benefit/Living Benefits Rider, the insured can receive an advance payment of part of the death benefit while they’re still alive. This payout is typically a percentage or fixed amount of the death benefit and is deducted from what would be paid to beneficiaries later, reducing the remaining death benefit accordingly. The purpose is to help cover medical costs or living expenses without surrendering the policy. This isn’t about terminating the policy with no payout, nor is it simply a premium waiver, and it isn’t an independent, fixed extra benefit separate from the death benefit—the money comes from the death benefit and reduces future proceeds.