West Virginia State Life Insurance Practice Exam

Which statement about accelerated death benefits is true?

1. Available without any condition

2. Must have a terminal illness to qualify

3. Only available for whole life policies

4. Can be requested at any time

The correct answer is: Must have a terminal illness to qualify

Accelerated death benefits are insurance provisions that allow policyholders to receive a portion of their death benefit while they are still alive, usually due to a terminal illness or critical condition. This feature provides financial assistance during a difficult time when the insured may require funds for medical expenses or other needs. The statement regarding the requirement of having a terminal illness to qualify accurately reflects a common stipulation associated with accelerated death benefits. Insurance companies typically require evidence of a terminal condition, which is defined as an illness leading to a life expectancy of a specified duration (often 12 to 24 months). This qualification ensures that the benefit is used in situations where the policyholder truly needs financial support due to critical health issues. Other statements do not accurately reflect the nature of accelerated death benefits. For instance, while these benefits are valuable, they are not universally available without conditions (as stated in the first option), nor are they exclusively tied to whole life policies since many types of life insurance, including term and universal life, may offer this feature with appropriate qualifications. The last point about requesting benefits at any time also lacks precision, as policyholders generally must meet specific conditions, including the documentation of a qualifying illness.