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

Amends the Internal Revenue Code to require that payment under a life insurance contract on the life of an insured who is terminally ill be treated as a death benefit, making such payment eligible for tax 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 individual upon the insured's becoming terminally ill.

Provides that applicants for or recipients of assistance under the Social Security Act may not be required to elect to receive accelerated death benefits under life insurance policies.