State RegulationsOH specificDifficulty 2/5
A Columbus insured whose condition meets the policy's terminal-illness definition elects to receive an accelerated benefit. What effect does the payment have on the death benefit?
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Answer & full 3-part explanation (select an option above, or peek)
Why C is correct
Accelerated benefit provisions under ORC 3915.21 and OAC 3901-6-06 advance part of the face amount to a terminally ill insured, and the advance - together with any charges or interest the policy specifies - is deducted from the death benefit paid at death. The advance can also affect the remaining coverage and any cash values as the policy describes.
Why the other options are wrong
- A) The advance is not a separate pool; it is an acceleration of the existing death benefit.
- B) An advance can never increase the death benefit; it reduces what remains.
- D) The provision pays an accelerated portion of the death benefit; it does not convert the policy into an annuity.
Memory hook
Accelerated = borrowed from the death benefit, repaid by deduction.