Getting Term Life Insurance with an Accelerated Death Benefit

Getting Term Life Insurance with an Accelerated Death Benefit
Table of Contents
    Add a header to begin generating the table of contents

    Term life insurance is a great thing to have in and of itself, but it can be transformed into even better coverage for your life if you understand policy attachments. An Accelerated Death Benefit is one of these attachments. It is just one more way of making sure that your eventual passing does not come as a burden.

    What is an Accelerated Death Benefit?

    A regular life insurance policy pays the benefits to a beneficiary after the policyholder passes away. With an accelerated death benefit, however, this isn’t necessarily the case. This is essentially an attachment (or as many see it, an enhancement) to a life insurance policy that makes it possible for the death benefit to be paid before the policyholder has died, and the policyholder themself receives the funds. After they die, however, the policy’s beneficiaries can still receive benefits, albeit a reduced amount.

    With this kind of policy, payment of benefits can be requested in the following situations:

    • The policyholder has been diagnosed with a terminal illness and is expected to not live longer than one to two years.

    • The policyholder requires an organ transplant or other extraordinary treatment that carries great risk.

    • The policyholder has been diagnosed with an acute illness like AIDS or acute heart disease.

    With some companies, like Guaranteed Universal Life and North American Life Insurance, another acceptable situation is when the policyholder has been permanently confined to a nursing home or similar type of facility, or they require long-term care because they can no longer take care of themself.

    The provisions for accelerated may be included in a life insurance policy when it has been purchased or attached as a rider. Accelerated death benefits are also referred to as “living benefits”.

    How Much is Paid Out?

    The exact amount of the death benefit paid out early to the policyholder varies, but usually it goes up to 50 percent of the policy value.

    If your health should happen to improve rather than result in your demise, you typically do not have to return the money.

    When You Should Consider Using It

    The good news is that the accelerated death benefit usually comes as a free life insurance rider to most life insurance policies. The question you’ll have to ask yourself though, is when and if you want to use it. Many people who choose to use the accelerated death benefit option already know they have less than one year to live, and they then use the benefits to help pay for their treatments and other costs needed to extend their lifespan. This can help ease the financial burden from medical bills for their family. Of course, to have it as an option you will need to make sure it is added on to your regular coverage.

    On the other hand, receiving accelerated death benefits can leave little left for your family after you are actually gone. This can be problematic for some, even though your medical bills will likely be taken care of. Receiving accelerated death benefits can also affect your Medicaid eligibility.

    We are prepared to answer all of your questions to help you determine whether an accelerated death benefit

    Getting Term Life Insurance with an Accelerated Death Benefit

    Thanks for reading, Getting Term Life Insurance with an Accelerated Death Benefit. Ready to take the next step?

    Get started now by filling out our free instant life insurance calculator and compare rates from dozens of the top life insurance companies. We look forward to helping you get the coverage you need.

    To learn more about life insurance, make sure to visit some of our other pages like Life Insurance Types and Life Insurance 101 to find out all the shopping and insider tips to buying life insurance.

    Michael Quinn

    Michael Quinn

    Michael is a licensed life insurance agent, expert & owner of Life Insurance Blog. LIB has helped thousands of shoppers understand life insurance and secure affordable coverage.

    Share this post with your friends & Family