Final answer:
An accelerated death benefit rider is an alternative to a life settlement, allowing policyholders to access part of the death benefit before death, often in cases of terminal illness, rather than selling the policy to a third party.
Step-by-step explanation:
Among the listed choices, a) accelerated death benefit rider is considered an alternative to a life settlement. An accelerated death benefit rider allows a policyholder to access a portion of their life insurance policy's death benefit before death, often in the case of a terminal illness or a severe medical condition.
It enables the insured to use the funds for various expenses, such as medical bills or end-of-life care, thus providing financial relief without having to sell the policy to a third party as in a life settlement.
Life settlements involve selling a life insurance policy to a third party for an immediate cash payment, which is less than the policy's death benefit but more than its cash surrender value.
However, with an accelerated death benefit rider, the policyholder can directly access part of the death benefit while still alive. Other options like b) waiver of premium rider, c) extended term option, and d) decreasing term option do not involve accessing the policy's benefits prior to death but instead modify the insurance coverage in different ways.