Life · Chapter 5 · Riders
Accelerated Death Benefit (Living Benefit)
Definition
Lets a terminally ill insured — certified by a physician as expected to die within 24 months or less — collect part of the death benefit while living, income-tax-free (26 U.S.C. §101(g)). Any amount taken is subtracted from the death benefit. Usually no extra premium.
Exam tip
Terminal-illness accelerations are fully tax-free. Chronic-illness accelerations are tax-free only up to the IRS per-diem limit (§101(g)(3)(D)) — a favorite distinction.
Easy to confuse with
These are what this term gets tested against — if you can't tell them apart cold, drill the contrast.
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