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What are accelerated benefits?
Since the 1980s, many life insurance companies have offered terminally ill insureds an what has been come to be known as an “accelerated death benefits option.” The Accelerated Death Benefit allows the policy owner to receive, in advance of the insured person’s death, a significant portion of the death benefit that otherwise would be paid after death to the beneficiaries. Often as much as 80%, and sometimes more, is available at any time within the last year or two of the person’s projected life.
The funds received from accelerated benefits can be used by the policy owner for any purpose he or she chooses, whether to pay for extra or experimental medical care, to take a trip, to improve a home, hire nursing staff, or anything else.
As accelerated death benefits originally were created as an act of grace (sometimes terms a “policy liberalization”) by the insurance companies, long after the policies were issued, many policies do not mention them. While more recent policies are more apt to have accelerated death benefits provisions built in, do not let the absence of a provision deter you from asking the company if it offers such a benefit if the policy is silent, or a more attractive benefit than the policy itself provides. While practices vary from company to company, sometimes the accelerated death benefits take the form of “loans” and an “assignment” with the balance of the face amount, less any interest, to be paid to the insured's estate on death. |
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