To amend the Internal Revenue Code of 1986 with respect to the tax treatment of payments under life insurance contracts to terminally ill individuals.

Amends the Internal Revenue Code to provide that payment under a life insurance contract to an insured who is terminally ill be treated as a death benefit, making such payment eligible for exclusion from gross income.

Provides that any reference to life insurance shall be treated as referring to a qualified terminal illness rider. Provides for the tax treatment of such riders. Describes such a rider as one which provides for payments to an insured upon the insured's becoming terminally ill.