LLQP Life Insurance · Component 2.2 · 30% of the exam
A terminal illness (accelerated death) benefit allows the insured to:
- AConvert the life policy to disability insurance that pays a monthly income during the illness, for as long as the insured cannot work
- Receive part of the death benefit in advance when terminally ill with a short life expectancy, with the balance paid at death
- CCancel the policy for a refund of all premiums paid, since the coverage is no longer needed
- DIncrease the face amount without evidence, so the family receives more when the insured dies
Correct answer: B) Receive part of the death benefit in advance when terminally ill with a short life expectancy, with the balance paid at death
Accelerated benefits provide money when it is most useful — for care, debts or family time — by advancing part of the death benefit. The advance, plus any interest or fee, reduces what the beneficiary later receives. Many insurers provide it without an explicit premium.
Why the other options are wrong
- AThe benefit does not convert to disability insurance.
- CIt is an advance of the death benefit, not a cancellation.
- DTerminal illness benefits advance money; they do not increase coverage.
Exam tip
Accelerated death benefit: an advance of part of the death benefit on terminal diagnosis; the balance is paid at death less the advance and any interest.
Common mistake
Thinking the accelerated amount is paid in addition to the full death benefit.
What this tests
CISRO competency component 2.2 — Analyze the available products that meet the client's needs — which is weighted at 30% of the Life Insurance module. Written against the published curriculum.
More from component 2
- A client has a need lasting about twenty years and compares a ten-year and a twenty-year term policy. The main point to explain is that:
- A client exercises the conversion privilege on his term policy. The permanent premium will be based on:
- A client notices that a small policy costs proportionately more per unit of coverage than a larger one. The explanation is that:
- A client wants to pay monthly rather than annually. The agent should explain that monthly payment:
- A client asks why dividends from her participating policy are not taxed like interest from a bank. The reason is that a dividend is:
- A universal life policyholder is choosing among the investment options inside her policy. She should understand that:
Practice the whole Life Insurance module
Timed sets weighted like the exam, and review of every question you miss. Free to start.