Accelerated Death Benefit Rider Definition
For no-cost, an Accelerated Death Benefit Rider provides up to 50% of the policies’ death benefit (typically capped at $250,000) if the insured is diagnosed with a terminal illness and has a life expectancy of 12 months or less to live. Typically included with a term life policy.
Description of Benefits
An accelerated benefit is the advance of a portion of the policy death benefit prior to the covered insured’s death due to a terminal illness.
The accelerated death benefit rider is typically included for free with most of the term life companies we offer. The rider offers no cash value or loan value.
When it Would be Used
The insurance company will pay the insured the benefit when, in writing, they receive proof that the insured has been diagnosed with a terminal condition. The terminal condition means the imminent death is expected to be in 12 months or less.
When it Won’t be Used
This rider is not intended to provide coverage for long-term care or a payment of a nursing home facility.
This is a great free rider that can help if you were ever to get diagnosed with a terminal illness like cancer, for example. If your Dr. was to give you a diagnosis of less than a year to live then you could get access to 50% of the death benefit for your use. So if you have a $250,000 term policy you could use $125,000 of the death benefit.
Effect on your policy
Most policies have a cap of $250,000 so if your term policy is over $500,000 you can still only access the $250,000 of the death benefit.
Upon payment of the accelerated benefit, your policy will remain in force and the total death benefit will be paid at the death of the insured minus any outstanding benefits paid.
Example of benefit
An updated policy with a new death benefit should be provided by the insurance company. The new policy premium will be based on the new death benefit amount that remains on the policy after the benefit is paid. So a $100,000 policy that may have cost $250 a year would be a $50,000 policy that now costs $170 a year.
Sample available amount of death benefit
|Death Benefit||Available Amount with Rider|