What is an accelerated death benefit?

An accelerated death benefit is a provision within a life insurance policy that enables the policyholder to access a portion of the death benefit while they are still alive, particularly if they receive a diagnosis of a terminal illness. This feature is designed to provide financial assistance during a difficult time, allowing individuals to use the funds for medical expenses, living costs, or other needs that may arise due to their condition.

The significance of this benefit lies in its ability to alleviate financial stress, which can be critical when facing significant health challenges. It empowers the policyholder to make decisions about their care and quality of life without the immediate burden of financial concerns.

By contrast, the other options do not accurately describe an accelerated death benefit. The payment to beneficiaries upon the policyholder's death is the standard death benefit, not an acceleration of it. A special bonus added after a policy has been active does not align with the concept of accessing funds early for health-related reasons. Lastly, insurance for accidents occurring in the workplace pertains to a different type of coverage entirely, focusing on risk associated with employment rather than health conditions like terminal illnesses.