State RegulationsPA specificDifficulty 2/5
A producer is explaining an accelerated benefit rider to a client whose spouse was just diagnosed with a qualifying terminal condition. When the insurer pays an accelerated benefit under the rider, what happens to the policy?
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Answer & full 3-part explanation (select an option above, or peek)
Why B is correct
Under 31 Pa. Code 90f.3, an accelerated benefit is an advance against the death benefit, not a payment in addition to it. The amount the insurer pays while the insured is living is subtracted from the face amount, and the policy continues for the remaining balance, which is what the beneficiary will receive at death. The producer should make this trade-off clear: the client gains needed living benefits now in exchange for a smaller death benefit later.
Why the other options are wrong
- A) The policy does not terminate; it remains in force for the death benefit that remains after the acceleration.
- C) The insurer does not pay the full face amount while keeping coverage at the original level; paying everything would leave nothing to reduce.
- D) No premium refund occurs; the payment is an advance of benefits that reduces the eventual death benefit.
Memory hook
Take some now, the beneficiaries get less later — the advance shrinks the face.