Final answer:
Proceeds from a life insurance contract provided before death due to specified conditions are known as living benefits or accelerated death benefits, applicable to cash-value life insurance policies. This allows policyholders access to funds which can also be borrowed against, although they must be repaid with interest.
Step-by-step explanation:
Proceeds payable under a life insurance contract to a policy owner in anticipation of death or upon the occurrence of specified life-threatening conditions as defined by the policy are best described as a living benefit or accelerated death benefit.
This type of benefit is available through what is often termed as cash-value (whole) life insurance, allowing policyholders to utilize funds from the policy while they are still alive, typically in the case of terminal illness or a severe medical condition.
The cash value that accumulates can be used by the owner of the policy for various needs, acting as a financial account. Additionally, a life insurance company may allow policyholders to borrow against the cash value of their policy.
However, it's essential to note that any money borrowed must be repaid with interest. This system creates a form of financial protection, ensuring support for the insured's beneficiaries while also affording certain financial flexibilities to the policyholder prior to death.