New Jersey Life Producer Practice Exam

A benefit that prepays a portion of the death benefit due to specified illness during the insured's lifetime is known as what?

1. Accelerated Benefit

2. Critical Illness Rider

3. Terminal Illness Clause

4. Living Benefits Rider

The correct answer is: Accelerated Benefit

The term that describes a benefit allowing the prepayment of a portion of the death benefit upon diagnosis of a specified illness during the insured’s lifetime is known as an Accelerated Benefit. This benefit enables policyholders to access funds early, which can provide necessary financial support to cover medical expenses or other costs associated with their illness. By having this option, individuals can alleviate some of the financial burden while they are still alive, ensuring that they can use their life insurance policy in a way that supports their needs at a critical time. In this context, the concept clearly aligns with the function of an Accelerated Benefit, as it explicitly offers a prepayment of the life insurance proceeds. Other terms like Critical Illness Rider and Living Benefits Rider may seem similar, but they often pertain to different structures or conditions related to benefits. A Terminal Illness Clause generally specifies that the full death benefit is paid only in the event of a terminal illness diagnosis, which may not encompass the range of illnesses that an Accelerated Benefit would cover. Therefore, the Accelerated Benefit is the most precise description of the situation outlined in the question.