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Accelerated death benefits are a relatively new option with life insurance policies. To qualify for these benefits, you must be terminally ill or chronically ill in some cases. For policyholders with severe health conditions, it may be worth it to take advantage of this option.
When you take accelerated death benefits, you get a portion of the benefits from your life insurance policy in advance of your death. The insurance company sets the maximum amount, which can be as high as 95% of your death benefit. You make the decision as to how much you want in advance.
This is typically only allowed for policyholders who are terminally ill with a life expectancy of two years or less. Although you must continue paying your premiums, you will not have to repay the accelerated death benefit amount. When the death benefit becomes due, that amount will be deducted from the face value of your policy.
Eligibility requirements for accelerated death benefits can vary depending on both the insurance company and the life insurance policy itself. Typically, age is not a factor in eligibility. Marital status, veteran status, geographic location, income, and assets do not factor into eligibility. The primary factor is life expectancy.
Generally, to qualify for this type of benefit, your life expectancy must be two years or less. Under some policies, you may be eligible for accelerated death benefits with a longer life expectancy if you have a terminal illness. In some cases, you may qualify if:
Your state of health and life expectancy are not the only requirements for accelerated death benefits. Policy requirements also apply. The face value of your life insurance is the greatest policy factor. If it is less than $25,000, it would not be worth the effort to claim accelerated death benefits for you or your insurer.
If you are considering taking accelerated death benefits, speak with our experienced agent. We can discuss the pros and cons with you and advise you of other available options for life insurance policyholders.
Filed Under: Life Insurance | Tagged With: Life Insurance