Final answer:
The Terminal Illness Benefit (TI) allows policyholders to receive part of their death benefit early if diagnosed with a terminal illness, which does reduce the total death benefit available to beneficiaries upon the policyholder's death.
Step-by-step explanation:
When discussing the Terminal Illness Benefit (TI) and its impact on the death benefit in a life insurance policy, there are some key considerations. Typically, the Terminal Illness Benefit allows a policyholder to receive a portion of their death benefit early if they are diagnosed with a terminal illness that meets certain criteria defined in the policy. This early payout is deducted from the total death benefit amount, thus reducing the amount payable upon the policyholder's death.Therefore, activating the TI benefit usually means that the beneficiaries will receive a reduced death benefit, due to the prior claim made under the Terminal Illness Benefit. It is crucial for policyholders to understand these terms and how they affect the overall benefits of their life insurance policy.