Final answer:
Upon using the accelerated benefits rider due to a terminal disease, Alex receives 30% of his life insurance policy's face amount, which is $150,000. When he passes away, the beneficiary is entitled to the remaining death benefit, which is $350,000, the original amount minus what was already paid out.
Step-by-step explanation:
Alex owns a graded premium life policy with a face amount of $500,000. He has added a family term rider and an accelerated benefits rider of 30% to his policy. Upon diagnosis of a terminal disease, Alex activates the accelerated benefits rider and receives the maximum amount allowable. When the accelerated benefits rider is activated, the insurance company provides a portion of the death benefit before death, which in Alex's case is 30% of $500,000, amounting to $150,000.
After the payment of the accelerated benefit, the remaining death benefit under the policy is reduced by the amount of the accelerated benefit paid. Therefore, when Alex passes away three months later, his beneficiary would receive the remainder of the death benefit, which would be the original face amount minus the accelerated benefit already paid. This means the beneficiary will be paid $350,000 ($500,000 - $150,000).