Which of the following is considered to be an alternative to a life settlement?

Choosing the accelerated death benefit rider as an alternative to a life settlement makes sense because this feature allows policyholders to access a portion of their death benefit while they are still alive, typically in cases of terminal illness or significant health decline. This can provide immediate financial support for medical expenses, hospice care, or other related costs, similar to a life settlement, where the policy is sold for cash value.

In contrast, a life insurance policy loan enables a policyholder to borrow against the cash value of their policy, but this requires repayment with interest and does not provide an option for immediate cash in exchange for the death benefit. A term rider serves to extend coverage beyond the primary policy but does not offer immediate cash benefits or liquidity options. Cash value surrender allows the policyholder to withdraw the accumulated cash value but can also result in losing the insurance protection entirely, which may not be as beneficial in urgent financial situations as accessing funds through an accelerated death benefit rider. Thus, the accelerated death benefit rider effectively serves as an alternative to life settlements by providing immediate access to funds when needed.