What does a living needs rider provide in the case of a terminal illness?

A living needs rider allows policyholders diagnosed with a terminal illness to access a portion of their life insurance policy’s death benefit while they are still alive. This can be particularly beneficial for covering medical expenses, long-term care, or personal needs during the period of their illness.

By offering this partial payment of the death benefit, the rider provides financial support when it is most needed and can alleviate some of the burdens often associated with terminal conditions. The remaining death benefit is typically preserved for beneficiaries upon the policyholder's passing.

In contrast, the other options represent different types of benefits that either don't specifically relate to the financial needs at the time of a terminal illness or aren't components of a living needs rider. For example, a full payout at diagnosis would not consider the need to manage funds over time, while a waiver of premiums would relieve monthly payment obligations but does not provide immediate funds. An extension of the policy duration might offer some security, but it does not address the pressing financial needs that arise from a terminal illness.