Your insurance policy pays out to your loved ones upon your death. However, what should you do in the meantime, if you have a terminal illness?
The Definition of an Accelerated Death Benefit
When the AIDS virus made headlines in the late 1980’s, there didn’t seem to be much to do to progress the lives of those it affected. The financial strains of medications and job loss were so much to bear; insurance companies saw an opportunity to help their insured with an insurance rider now known as the Accelerated Death Benefit.
This is an attachment to the insured life insurance policy that allows patients diagnosed with a terminal illness to receive a portion of that benefit while they are alive. This money should be used to help with their treatment and survival costs.
Which Policies Allow for An Accelerated Payment?
More than likely you’ll find the accelerated death benefits rider available for permanent life insurance policies valued $25,000 or more. Some term policies allow this as well. If you have a policy through a group benefit, such as with your employer, you should be able to talk to your benefits administrator to see if they offer it. Although you may not see this advertised or your agent does not bring it up, it’s wise to just ask because it may be available.
Circumstances That Allow You to Request an Early Payout
As mentioned, receiving an early payout is meant for those diagnosed with a terminal illness. It’s generally issued when a patient has less than one year to live, however; there are a few other circumstances that allow an early payout as well.
- An acute illness such as AIDS or an acute heart disease.
- A catastrophic illness, such as an organ transplant. Something of this nature is considered an extraordinary treatment.
- If you are confined to a nursing home for life or need long-term care for your daily living activities, such as dressing, bathing, or eating.
Should I take it Because I Can?
Before taking your accelerated death benefit, you may want to consider all your options. If you use this benefit, you will leave nothing left for your loved ones once you have passed on. Check with your insurance provider regarding your current long term care or comprehensive health insurance. These are in place to cover your medical and long-term care costs. Also, if you take your accelerated death benefits, this could be considered taxable income. This may put you over the income limit to receive Medicaid, which could also help with your expenses.