Which statement about accelerated death benefits and living benefits is true?

• A. They provide access to a portion of the death benefit if diagnosed with terminal illness
• B. They accelerate the policy's annual premiums
• C. They increase the death benefit after the insured's death
• D. They have no effect on policy face amount

Answer: (A)

The main idea here is that accelerated death benefits and living benefits let a policyowner access part of the death benefit while the insured is still alive, under defined conditions such as a terminal illness. The statement that they provide access to a portion of the death benefit if diagnosed with terminal illness is true because these riders are designed to provide funds now to help with medical costs or care, rather than waiting until death.

They do not accelerate the policy’s premiums, and they do not increase the death benefit after death. In fact, the amount paid out early is typically deducted from the remaining death benefit, reducing what would be paid to beneficiaries later. So these features mainly offer early liquidity, often reducing the face amount payable later.