What is a living benefits rider?

A living benefits rider is a provision that allows the policyholder to access a portion of the death benefit while still alive, typically in the case of terminal illness, chronic illness, or specific medical conditions. This means that if someone is diagnosed with a severe illness, they can withdraw or receive a part of the life insurance payout, which can help cover medical expenses or improve their quality of life during a difficult time.

This rider enhances the functionality of a life insurance policy by providing policyholders with additional financial flexibility, allowing them to use the funds for necessary expenses rather than waiting until after their death for beneficiaries to receive the full benefit. It's particularly useful in situations where the policyholder needs immediate financial support due to severe health concerns.

In contrast, the other options do not accurately reflect the purpose of a living benefits rider. Increasing premiums, excluding pre-existing conditions, or terminating the policy early do not pertain to the core function of enabling access to funds during the policyholder's lifetime.