Final answer:
The accelerated death benefit rider allows an insured person with a terminal illness to access a part of their life insurance death benefit while they are still alive. This can provide financial support for medical and other expenses related to the illness.
Step-by-step explanation:
The life insurance rider that is also referred to as the living benefit rider and allows the insured to receive a portion of the death benefit prior to death if the insured has a terminal illness is called the accelerated death benefit rider. This rider is an additional feature that can be included in a cash-value (whole) life insurance policy, wherein a cash value component serves as a potential account for the insured's use. For instance, when a policy holder is diagnosed with a terminal illness, this rider enables them to utilize a part of the death benefit while still alive to pay for various expenses related to the illness.
For example, if an insured person with a terminal illness needs to cover medical bills or requires hospice care, the accelerated death benefit rider could provide financial relief. The death benefit amount would consequently be reduced by the amount paid out before death. Importantly, the insurance company may set specific conditions under which this benefit can be accessed, and there might be an impact on other benefits like eligibility for Medicaid, so it’s advisable to consult with an insurance professional before opting for this rider.