State RegulationsMA specificDifficulty 2/5
A Massachusetts insured with a terminal illness exercises the accelerated benefit in his life policy and receives a portion of the death benefit while alive. When he later dies, how is the benefit paid to his beneficiary treated?
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Answer & full 3-part explanation (select an option above, or peek)
Why B is correct
Under 211 CMR 55.00, the Massachusetts Division of Insurance's accelerated benefits framework, an accelerated benefit is an advance of the policy's own death benefit, not a supplementary payment. The insurer reduces the proceeds eventually paid to the beneficiary by the amount advanced, with any adjustments (such as interest or administrative charges) applied as the contract specifies. This is why accelerated benefits are described as early access to money the beneficiary would otherwise receive at death.
Why the other options are wrong
- A) The accelerated payment comes out of the death benefit; paying the full face amount afterward would make it a free additional benefit, which it is not under 211 CMR 55.00.
- C) There is no reward increase; the advance draws down the remaining proceeds.
- D) The advance is not a loan to be repaid; it simply reduces the eventual benefit under the Massachusetts accelerated benefits framework.
Memory hook
An advance, not a bonus — what's paid early comes off the back end.