An accelerated death benefit for terminal illness allows the insured to:

Why B is correct

An accelerated death benefit, also called a living needs benefit, permits the insured to receive part of the policy's death benefit while living, typically upon a terminal illness diagnosis with a limited life expectancy. The amount paid reduces the eventual death benefit payable to beneficiaries. It is not a loan, and any amounts already received are subtracted from what the beneficiary later receives, so the insured is spending down the policy's death proceeds early.

Why the other options are wrong

• A) Accelerated benefits are payments, not loans; the face amount is reduced rather than borrowed with an obligation to repay.
• C) Conversion to an annuity is a separate policy feature and is not part of the accelerated death benefit.
• D) Transferring ownership is a different transaction governed by assignment rules; accelerated benefits are about receiving living proceeds.

Memory hook

Terminal diagnosis? Tap the death benefit early — what you take out, your heirs do not get.

Why A is correct

The accelerated death benefit rider advances a percentage of the death benefit to the insured before death, typically upon the diagnosis of a terminal illness with a limited life expectancy. The amount advanced is deducted from the death benefit ultimately paid to the beneficiary. It allows the insured to use the policy values while living, often to pay medical or care costs. The rider is also called a living benefits or living needs rider. Because the advance reduces the death benefit, the beneficiary receives less at death.

Why the other options are wrong

• The benefit is tied to a terminal illness diagnosis, not to reaching a specific age such as 100.
• An interest-free loan is not what this rider provides; the rider is an advance of the death benefit, not a loan.
• The rider reduces the remaining death benefit; it does not double the amount payable at claim time.

Memory hook

Terminal illness plus ADB = the death benefit comes early, in part, when it is needed most.