IRC 101(g) addresses amounts received under a life insurance contract on the life of a chronically or terminally ill individual that are not received by reason of death-commonly called accelerated death benefits. Qualifying amounts may be excluded from income if requirements are met, including certification of chronic or terminal illness and, for chronic illness, compliance with qualified long-term care rules. Contract provisions and payer status determine specific tests.

Producers evaluate chronic-illness or LTC riders for 101(g)/7702B compliance so accelerated benefits remain excludable within per-diem or reimbursement limits.