Massachusetts Life Producer Practice Exam

A life insurance policyowner has been diagnosed with a terminal illness. Which of the following is often payable to a policyowner whose life expectancy is substantially reduced due to illness?

1. Death benefit

2. Terminal benefit

3. Accelerated (living) benefit

4. Survivor benefit

The correct answer is: Accelerated (living) benefit

The correct choice is the accelerated (living) benefit. This feature allows policyowners diagnosed with a terminal illness to access a portion of their life insurance policy's death benefit while they are still alive. This can help cover medical expenses, daily living costs, or other financial needs during a challenging time. The reason this option stands out is due to its focus on providing immediate financial relief to individuals experiencing reduced life expectancy, rather than solely waiting for a death claim to be processed after the policyowner passes away. With the accelerated benefit, policyholders can make informed decisions about their care and alternative expenses, enhancing their quality of life during their final days. The death benefit represents the total amount to be paid out upon the policyholder's death, but it does not address the immediate financial needs that may arise due to terminal illness. A terminal benefit could be seen as similar but is not officially recognized as a specific term within most insurance policies, and survivor benefits typically refer to benefits paid to survivors of a policyholder, rather than benefits accessed by the policyholder themselves while living.