What does an accelerated death benefit allow for a policyholder?

An accelerated death benefit is a provision in a life insurance policy that allows the policyholder to access a portion of the death benefit while still living, typically in the event of a terminal illness or a critical health condition. This means that if a policyholder is diagnosed with a terminal illness, they can receive some of the insurance payout early to help cover medical expenses, living costs, or other financial burdens associated with their condition. This benefit eases the financial strain during a challenging time and can provide peace of mind.

The other options presented do not accurately capture the purpose of an accelerated death benefit. For instance, while additional funds for investment may sound appealing, an accelerated death benefit specifically pertains to accessing benefits due to health concerns rather than funding investments. Similarly, receiving full benefits before retirement does not align with the nature of this benefit, as life insurance payouts are generally linked to the death of the insured rather than retirement status. The option regarding transfer to another insured is unrelated to the concept of accelerated benefits, which focuses on accessing funds due to impending death rather than transferring policy benefits.