For purposes of Form 1099-LTC (Long-Term Care and Accelerated Death Benefits) and Form 8853, the IRS considers you terminally ill if a physician has certified that you have an illness or physical condition that can reasonably be expected to result in death within 24 months from the date of the certification.
By checking this box, you're indicating that the insured was certified as terminally ill by a physician. If the only payments received during the year were accelerated death benefits paid because of the terminal illness, you can skip the rest of this section. These benefits are generally excluded from income and are typically not taxable.