As baby-boomers are approaching their retirement age, there has been an alarming trend in the rising number of people contracting serious illnesses such as cancer. In fact, 1 in 3 Americans are expected to be diagnosed with cancer within their lifetime.
Thankfully, some life insurance companies have been working on creating new and innovative life insurance products to help tailor their insurance policies to better fit each client’s’ specific needs. One of these products is known as an Accelerated Death Benefit Rider.
An “Accelerated Death Benefit Rider,” or “A Living Benefits – ADB Rider,” is one of the most common “riders” in the life insurance industry. This benefit is typically free, and most life insurance companies include it as an added layer of protection with every policy they sell.
However, not all insurance companies are created equal…Some insurance companies, actually charge for this benefit, and others don’t offer it at all.
In this article we’ll explain how an Accelerated Death Benefit Rider works, which health issues allow you to access this benefit, and how to make sure your policy offers it.
Quick Article Guide:
An accelerated death benefit rider is an added benefit that is often attached to term and permanent life insurance policies. It enables the insured to collect a portion of their policy’s death benefit if they are diagnosed with a terminal illness or a severe health condition.
Most life insurance companies will advance the insured up to 50%-75% of their policy’s death benefit, and this money does not need to be paid back if the insured survives. Accelerating your policy’s benefits will not void your life insurance, but if you pass away, the amount paid in advance will be deducted from the policy’s final death benefit.
As a Hypothetical Example f How An Accelerated Death Benefit Works:
If you purchased a $500,000 term policy from Prudential and became terminally ill, Prudential would allow you to access up to $375,000. If you survive your term, this money is yours free and clear. If you pass way, your family will receive the remaining death benefit from your policy, in this case $125,000.
Accelerated death benefit riders, also known as living benefits, were created in the 1980’s as a response to the rising number of people contracting HIV/AIDS. As time has passed, the majority of life insurance companies have expanded their list of terminal illnesses to allow their customers to access this benefit if they are diagnosed with cancer, kidney failure, or other serious illnesses.
Most of the time an accelerated death benefit rider is automatically provided by your life insurance policy, but some insurance companies sell them as an add-on. An accelerated death benefit rider works the same, whether it is included with your policy for free, or if you paid to have it included as an additional benefit. Like other life insurance benefits, an accelerated death benefit is typically paid out as a tax-free lump sum.
In the United States, more than three million people are protected by accelerated benefits and about 150 life insurance companies offer life insurance policies with some type of accelerated benefits. At Term Life Advice, our agents work with over 60 top-rated life insurance companies and will be happy to help you find a policy that fits your unique situation.
If your term or permanent life insurance policy does not include a free accelerated death benefit rider, give us a call at: 855-902-6494 and we can provide you with quotes for an affordable life insurance policy that does.
Each life insurance company has their own guidelines to determine when a policyholder is eligible to receive their policy’s accelerated death benefits. Below we’ve listed the most common reasons for a life insurance company to allow you access your policy’s ADB rider.
• Diagnosis of a terminal or chronic illness:
If your doctor diagnoses you with a terminal illness and you are expected to pass away within a specific period of time, usually within six months to a year.
• Catastrophic illness or need for extreme medical intervention:
If you require continuous life support or if you are in need of an organ transplant.
• Permanent confinement:
If you are confined to an assisted living facility, receiving hospice care, or residing in a nursing home.
• Long-term care:
When there is a need for long term care because the insured cannot perform “activities of daily living,” which include bathing, getting dressed, and eating.
If your family has a history of serious illnesses, purchasing a life policy with an accelerated benefit rider is something that you will want to consider, especially with the rising cost of health care. The benefits from your life insurance policy can be used for whatever you may need, and there are no restrictions as to how this money is spent.
The money from an accelerated death benefit can be used to pay for your medical bills, to take time off work to get better, or to take your family on the dream vacation that you have always talked about while you still can. These funds can help you live comfortably during the last stage of your life, or allow you to dictate how the proceeds of your life insurance policy are spent while you are still alive.
Unfortunately, you cannot add an accelerated benefit rider to your existing insurance policy because the life insurance companies do not want to take the risk that you may already be sick or terminally ill. If you have any questions about Accelerated Death Benefit riders and how they work, give one of our experienced agents a call at: 855-902-6494, and we will be happy to help.
It’s important to remember that people typically purchase life insurance to provide their loved ones with financial stability after they pass away. While using the “living benefits” in your policy may be your only option, doing so may have an effect on the money you intended to leave behind for your loved ones. Nonetheless, it is better to have this option than not.
Remember, accelerated benefits are designed to be used in cases where the insured needs to cover expenses for treating a terminal illness or paying for long term care. Accelerated death benefits are not intended to replace health insurance or long term care insurance.
At Term Life Advice we work with more than 60 top-rated life insurance companies, and most of these companies offer a free accelerated death benefit rider with every policy they sell. Each life insurance company has their own unique underwriting guidelines, and policy features. By having access to so many leading life insurance companies, we’re able to match our clients with the best options available.
Our agents all have decades of combined experience, and we can help you save time and money on your life insurance. Most importantly, we only represent life insurance companies that are financially stable and “A” or better rated by AM Best.
Our goal is to help our clients find the most affordable life insurance policy that fits their unique situation. We are an owner-operated company and we educate our customers about their life insurance options rather than selling them a policy to earn a quick commission.
No matter what your life insurance needs are, give us a call and we will be happy to find you the perfect policy. Give us a call today, toll-free at: 855-902-6494 or request a free quote online below to instantly compare rates from dozens of leading life insurance carriers.