Question

Alice owns a $100,000 life insurance policy with an accelerated benefits rider which includes a

40% clause. Five years after purchasing the policy, Alice is diagnosed with a serious illness. She
notifies the insurer and fourteen months later dies. How much will the policy pay her beneficiary
at the time of death?
A. $0
B. $40,000
C. $60,000
D. $100,000

Answer 1

Alice's life insurance policy would pay out the full face value of $100,000 to her beneficiary at the time of death, assuming she did not use the accelerated benefits rider before her passing.

Step-by-step explanation:

If Alice owns a $100,000 life insurance policy with an accelerated benefits rider that includes a 40% clause, and she is diagnosed with a serious illness, this rider allows her to receive a portion of her life insurance benefit before her death. In Alice's case, she would be able to access 40% of her policy's value, which is $40,000, due to her illness.

However, since there is no information given about whether she exercised this option before her death, we will assume she did not. Therefore, considering Alice died fourteen months after being diagnosed without using her accelerated benefits, the policy would pay out the full face value of $100,000 to her beneficiary at the time of death.