Chartered Life Underwriter Exam 2025 – 400 Free Practice Questions to Pass the Exam

A terminal illness rider on a life insurance policy specifically addresses the financial burdens that may arise when a policyholder is diagnosed with a terminal illness. By being able to access a portion of the death benefit while still alive, the policyholder can cover medical expenses, pay for treatment, manage living costs, or settle debts that may accumulate during this challenging time.

This rider is particularly valuable as it provides financial relief and allows the policyholder to focus on their care and well-being, rather than worrying about financial constraints. When faced with a terminal illness, the immediate need for financial resources becomes critical, and the rider serves this purpose effectively.

The other options do not align with the specific function of a terminal illness rider. For example, accidental death risks are covered by accidental death benefit riders, loss of income due to premature retirement relates more to disability insurance or income protection, and insufficient coverage upon death does not directly attach to the functionality of a terminal illness rider, but rather to the broader life insurance policy.