Texas General Lines — Life, Accident, Health and HMOHealth InsuranceHard
A client is diagnosed with a terminal illness and has a life insurance policy with an accelerated benefits rider. This rider would allow the client to receive a portion of the death benefit while still living. Which of the following is NOT a typical condition for triggering accelerated benefits?
- APermanent institutionalization for long-term care
- BTerminal illness with a life expectancy of 24 months or less
- CCritical illness, such as a heart attack or stroke
- DLoss of employment due to company downsizing
Show answer & explanationAnswer & explanation
Correct answer: D. Loss of employment due to company downsizing
Accelerated benefit riders are designed to provide financial relief for severe health-related events, such as terminal or critical illnesses, or permanent long-term care needs. Loss of employment is not a health-related trigger for these benefits.
Why the other options are wrong
- A. Permanent institutionalization for long-term care is often a qualifying event for accelerated benefits.
- B. Terminal illness with limited life expectancy is a common trigger for accelerated benefits.
- C. Critical illness diagnoses are frequently included as triggers for accelerated benefits.
Accelerated Benefits Rider
A rider on a life insurance policy that allows the insured to receive a portion of their death benefit while still alive, typically triggered by a terminal illness, critical illness, or need for long-term care.
- Provides financial relief during severe health crises.
- Reduces the death benefit payable to beneficiaries.
- May be taxable depending on the circumstances.
- Common triggers include terminal illness (e.g., 24 months or less to live), critical illness (e.g., heart attack, stroke), or chronic illness requiring long-term care.
Memory trick: Accelerated benefits unlock early cash for dire health needs.