What is the living benefits concept in life insurance?

• A. Fixed death benefit only.
• B. Accelerated death benefits allow early payment of the death benefit upon diagnosis of terminal or certain chronic illnesses.
• C. The policy has no living benefits.
• D. The death benefit is paid in full only at maturity.

Answer: (B)

Living benefits in life insurance provide access to funds while the insured is alive under certain health conditions. The most common form is accelerated death benefits, which allow early payment of all or part of the death benefit if the insured is diagnosed with a terminal illness or a chronic illness that meets specific criteria. This helps cover medical expenses, care needs, or other costs without waiting until death. Taking an accelerated benefit reduces the eventual death benefit payable, and some plans may carry limits or fees. This concept differs from a traditional policy that pays only after death, or from policies with no living benefits, or from payouts tied to maturity. So, accelerated death benefits best embody the living benefits concept.