Terminal Illness Rider

A terminal illness rider (also called a terminal illness accelerated death benefit) allows a policyholder diagnosed with a terminal illness — typically with a life expectancy of 12 to 24 months — to access a portion of their death benefit while still alive. The advance is used to cover medical costs, hospice care, debt settlement, or any other expense. The benefit reduces the final death benefit paid to beneficiaries by the amount advanced, plus any applicable fees or interest. This rider is often included at no additional premium on modern permanent life policies and may be available on term policies as well. The advance is generally income-tax-free under IRS Section 101(g).