Glossary

Increasing death benefit (option B)

A universal life setting in which beneficiaries receive the face amount plus the accumulated cash value, so the payout grows as cash value builds.

Also called: option B, type B death benefit, option 2

An increasing death benefit, usually called option B (some insurers say option 2), is one of the death benefit choices on universal life and variable universal life policies. Instead of a flat face amount, the policy pays the specified amount plus the cash value at the time of death. The alternative is a level death benefit, or option A.

Formula: death benefit = specified amount + cash value. Say, hypothetically, a policy has a $500,000 specified amount and $80,000 of cash value. Under option B the beneficiary receives $580,000, compared with $500,000 under option A. Because the insurer always has the full $500,000 at risk, the net amount at risk doesn't shrink as cash value grows, and cost-of-insurance charges are higher than under option A at the same age.

Option B suits owners who plan to fund the policy heavily and want heirs to receive the cash value on top of the face amount. The pitfall is cost: higher charges eat into growth, especially at older ages. Many owners switch to option A later to reduce charges, which insurers usually allow without new underwriting; switching from A to B typically requires evidence of insurability. See universal life death benefit options A and B.

Last reviewed October 4, 2026

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Related terms

Level death benefit (option A) A universal life setting in which beneficiaries receive a fixed specified amount; cash value growth lowers the insurer's risk instead of adding to the payout. Universal life insurance Permanent life insurance with flexible premiums and an adjustable death benefit, built on an account credited with interest and charged monthly costs. Net amount at risk The part of a death benefit the insurer would pay from its own funds: the total death benefit minus the policy's cash value or reserve. Cost of insurance (COI) The monthly charge a universal life policy deducts to pay for its death protection, based on the insured's age, rate class and the amount at risk. Cash value The savings component that builds inside whole life, universal life and other permanent policies, which the owner can borrow against or withdraw. Corridor (death benefit corridor) The minimum gap the tax code requires between a universal life policy's death benefit and its cash value to keep the policy's tax advantages.

Related guides

Inflation and life insurance: is your coverage shrinking A fixed death benefit buys less every year as prices rise. How to measure the erosion, with BLS CPI data, and the practical ways to keep coverage adequate. Universal life death benefit options A and B Option A pays a level death benefit; option B pays the face amount plus the account value. How each affects cost, cash value and what your family receives.

Related tools

Inflation and your death benefit Shows what a level death benefit will be worth in today's dollars after years of inflation, and how much coverage would keep its buying power.