What are 'accelerated death benefits' in life insurance?

Accelerated death benefits are provisions in a life insurance policy that allow policyholders to access a portion of their death benefit while they are still alive, under specific conditions, such as being diagnosed with a terminal illness or facing a critical health situation. This option offers financial support during difficult times, helping cover medical expenses or other financial needs that may arise due to the policyholder's condition.

The concept is designed to provide policyholders with greater flexibility and peace of mind, knowing they can utilize their benefits before passing away if necessary. This support can be critical, as it allows individuals to manage their healthcare needs or wrap up their affairs while still living, rather than leaving it all to their beneficiaries after death.

Other options do not accurately describe accelerated death benefits. For example, benefits paid after turning 100 years old refer to different provisions in some policies but do not align with the purpose of accelerated benefits. Similarly, insurance funds solely for beneficiaries after death do not incorporate the idea of accessing benefits during the policyholder's lifetime. Incentives for timely premium payments relate to discounting or bonus structures, which again do not pertain to the concept of accelerated death benefits.