What is a terminal illness rider in life insurance?

A terminal illness rider is a specific provision in a life insurance policy that allows the policyholder to access a portion of the death benefit if they are diagnosed with a terminal illness. This rider is particularly beneficial because it provides financial support during a challenging time when medical expenses and end-of-life care may increase. By utilizing this rider, individuals can make necessary arrangements for their family's future or cover costs that may arise due to their condition.

This rider typically defines a terminal illness as one where a physician expects the insured to have a limited time to live, often 12 months or less. Accessing this benefit can help alleviate financial stress, enabling the insured to focus more on their health and loved ones rather than looming financial burdens.

The other options do not accurately describe the function and purpose of a terminal illness rider. While increased death benefits may be relevant in certain policies, they do not specifically relate to being diagnosed with a terminal illness. A mandatory requirement for policyholders does not fit the nature of a rider, as riders are typically optional additions. Furthermore, the elimination of waiting periods for claims does not directly connect to the benefits of a terminal illness rider, as this rider focuses on providing access to benefits during the policyholder's terminal condition rather than expediting claims in