What does an accelerated death benefit rider do?

• A. Allows early payment of a portion of the death benefit.
• B. Cancels the policy upon diagnosis.
• C. Increases the premium for the policy.
• D. Converts the policy to universal life.

Answer: (A)

An accelerated death benefit rider is a living benefits feature that lets the insured access part of the death benefit before death if diagnosed with a qualifying illness, such as a terminal or chronic condition. The money taken is meant to cover medical or caregiving expenses and is deducted from the death benefit that would later be paid to beneficiaries. This rider doesn’t cancel the policy, doesn’t automatically increase premiums, and doesn’t convert the policy into universal life. Depending on the policy, there may be medical certification requirements and potential tax or policy-structure implications, and the available amount is limited by the terms of the rider.