New Jersey Life Producer Practice Exam

What is the outcome when an insured accelerates their death benefit?

1. The entire death benefit is lost

2. They receive ongoing care benefits

3. They obtain a portion of the death benefit early

4. They gain additional coverage options

The correct answer is: They obtain a portion of the death benefit early

When an insured accelerates their death benefit, they are essentially accessing a portion of the death benefit while still alive, typically due to a terminal illness or other qualifying condition. This process allows them to use that money for medical expenses, long-term care, or other financial needs that arise as they face the end of their life. The term "accelerated death benefit" refers specifically to the ability to receive a part of the death benefit earlier than the policy's scheduled payout upon death. This is particularly valuable for individuals who may need immediate funds to cover costs associated with their condition. By choosing this option, the insured is not losing the entire death benefit but rather accessing part of it ahead of time, which they can utilize as needed during their life. This concept underlines the importance of understanding how life insurance benefits can serve policyholders while they are still alive, not just as a safety net for beneficiaries after death.