State RegulationsIL specificDifficulty 3/5
A policyowner with a life-threatening illness is weighing two routes: receiving an accelerated benefit from her own insurer, or selling her policy to a third party. How do Illinois rules distinguish these transactions?
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Answer & full 3-part explanation (select an option above, or peek)
Why D is correct
Illinois keeps the two regimes separate. An advance from the insured's own insurer that reduces the death benefit is an accelerated benefit governed by 50 Ill. Adm. Code 1407, with definitions supplied by 215 ILCS 5/4. A sale of the policy itself to a third party is a viatical settlement governed by 215 ILCS 5/159, the Viatical Settlements Act, under which the buyer becomes the new owner and beneficiary.
Why the other options are wrong
- A) The insurer advance is not a viatical settlement; only the third-party sale falls under 215 ILCS 5/159.
- B) Receiving money before death does not make a transaction an accelerated benefit; the source of payment and the structure differ.
- C) The advance is regulated — 50 Ill. Adm. Code 1407 sets its standards — so it is not an unregulated product.
Memory hook
Own insurer advances = accelerated; third party buys = viatical.