What is an accelerated death benefit?

An accelerated death benefit is a provision found in some life insurance policies that allows the policyholder to receive a portion of the death benefit while they are still alive, usually in the event of a terminal illness or a significant medical condition. This feature is particularly valuable for individuals facing life-threatening conditions, as it provides them with financial support for medical expenses, living costs, or other needs during a difficult time. The amount taken as an accelerated benefit is deducted from the total death benefit that will be paid to beneficiaries upon the policyholder's death.

This option stands out because it directly addresses the intent of the accelerated death benefit—a financial mechanism designed to ease the burden of an insured individual while they are alive, rather than focusing on the policy’s future benefits or the costs associated with the policy.

The other options refer to different aspects of insurance policies that do not align with the concept of an accelerated death benefit. For instance, tax deductions on premiums relate more to the tax treatment of insurance premiums rather than the benefit structure. Canceling a policy involves termination and does not provide the policyholder any immediate financial support, while clauses that increase premiums over time concern the cost of maintaining the policy rather than accessing funds from it.