Accelerated Death Benefit Rider: The idea behind a life insurance policy is to provide financial security for those who depend on you for financial support. Life insurance helps them get through rough times if you die earlier than expected.
Your dependents will have the income they need to live even after your death. The insurance policy will also help cover final expenses. In today’s post, we’ll go over the pros and cons of accelerated benefits, how the best rated life insurance companies determine your eligibility, and other tips. Let’s get started!
Accelerated Death Benefit Rider
How Do You Qualify For an Accelerated Benefits?
What you may not know though is that your policy could have certain living benefits that you could use if you become gravely sick. It’s known as an accelerated death benefit rider (ADB, for short).
The Accelerate Death Benefit rider is one of many life insurance riders available to life insurance shoppers.
Accelerated Death Benefit Rider Definition
Some life insurance policies have a clause that lets the policyholder attain benefits before their death.
There are typically five reasons a person can take advantage of accelerated benefits:
- They’re suffering from a terminal disease and will die within 24 months.
- Their illness is long-lasting and costs a lot such as AIDS, cancer, etc.
- They need an organ transplant of some type.
- They need to be placed in a nursing home permanently.
- They have some type of medically-incapacitating condition and unable to care for themselves properly – eating, bathing, dressing, etc.
Most of the top life insurance companies offer this benefit, they differ in the amount of money that can be used. They also are different with how close to death the insured needs to be to use them.
Life insurance companies offer a range of 25 percent to 100 percent of the death benefit to be used as an early payment.
The amount taken out via the Accelerated Benefits option is withheld from the death benefit beneficiaries are paid upon your death. In order to get this benefit, you may need to pay extra on the insurance premium in the form of a life insurance rider.
While some companies initially add the cost to the premium, others add the cost at the time you need it.
What type of insurance policies provide an Accelerated Death Benefit Rider?
These life insurance policies include:
- Universal Life Insurance policies
- Term Life Insurance policies
- Permanent Life Insurance policies
- Group Permanent or Group Term Life Insurance policies
If you choose to use this benefit, no restrictions have been imposed on how the money should be used. If you need assistance paying hospital bills, treatments or medications, you can use it for that.
Always talk to your life insurance company to see what they include or exclude.
The idea behind this benefit is to reduce the financial hardship you are suffering due to medical expenses.
It’s not a means to alleviate any long-term or comprehensive care insurance, as these were developed to handle the costs of long-term and medical care.
Positives and Negatives of Accelerated Death Benefit Riders
People who have a terminal illness with a life insurance policy can get some of their death benefits before their actual death. It’s known as the ADB, which can be used for assisted living, nursing home care, home health care and hospice.
Whatever amount is used, the death benefit given to your beneficiaries is less.
The reality about accelerated death benefits is that they’re something new – most people who have had their insurance policy may not even have a mention of the ADB option in the contract.
If you are interested in using the benefit, you need to talk with your company to see if they even offer it.
The biggest advantage of the accelerated death benefit is the ability to use the money before your death, but approval is only granted to people who are deemed terminally ill and are likely to die within the next two years (24 months).
You can also use the money for other things such as care-taking for yourself.
Who is Eligible for Accelerated Death Benefits?
The life insurance company and the policy itself determine who can and cannot use the Accelerated Death Benefits option.
However, life insurance companies typically factor in a person’s life expectancy, not age, to determine eligibility.
As previously noted, a person who is given two years or less to live can qualify for and receive the benefit. However, there are people who have a longer life expectancy but have a terminal illness can also qualify.
There are some policy requirements to keep in mind too. For instance, a life insurance policy’s face value may not be worth the effort to use the accelerated death benefits. If your policy is only $25,000 – then using the option isn’t worth the hassle.
The following factors do not determine eligibility:
- Marital status
- Veteran status
- Location
- Income
- Assets
Bottom Line
When you opt for an Accelerate Death Benefit rider, you’ll be provided with living benefits from your life insurance policy that you can use if you become terminally ill.
Some accelerated benefits are standard with life insurance policies and some have an additional cost.
At Life Insurance Blog, we can help you by finding the top life insurance companies for term, whole life and guaranteed universal life. We’ll search which companies offer Accelerate Benefits as an additional rider and who provides it as a standard feature.
Give us a call and let us help you today. You can also get instant life insurance quotes on this page using our free life insurance quote calculator.
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