Can You Use Life Insurance While You Are Still Alive?
What Is an Accelerated Death Benefit?
Shanti
9/24/20262 min read
Can You Use Life Insurance While You Are Still Alive?
When people think about life insurance, many assume that the benefits are only paid to their family after the insured person passes away.
However, some life insurance policies include benefits that may be available during the insured person’s lifetime under certain qualifying circumstances.
One of these features is an Accelerated Death Benefit Rider, sometimes referred to as a Terminal Illness Rider.
What Is an Accelerated Death Benefit?
An Accelerated Death Benefit Rider may allow an insured person to access a portion of their life insurance death benefit while they are still alive if they are diagnosed with a qualifying condition, typically a terminal illness.
For example, if you have a life insurance policy with a $500,000 death benefit and meet the requirements for an Accelerated Death Benefit, you may be able to receive a portion of that benefit during your lifetime.
The amount received in advance will generally reduce the remaining death benefit available to your beneficiaries.
When Can You Use This Benefit?
The specific requirements depend on the insurance company and the terms of your policy.
Typically, the insurance company will require medical documentation and certification from a physician confirming that you meet the policy’s eligibility requirements.
Some life insurance policies may also offer benefits for certain chronic or critical illnesses. However, the definitions, qualifications, and available benefits can vary significantly between insurance companies and policies.
For this reason, when purchasing life insurance, it is important to look beyond the amount of the death benefit.
The policy’s riders and living benefits can also be important features to consider.
What Can the Money Be Used For?
Depending on the terms of the policy, funds received through an Accelerated Death Benefit may be used for expenses such as medical care, in home care, everyday household expenses, or other financial needs.
This financial support may be especially valuable when a serious illness results in increased expenses or reduced household income.
Does Using This Benefit Reduce the Money Your Family Receives? Generally, yes.
An Accelerated Death Benefit is not an additional amount of money separate from your life insurance benefit. Instead, you are accessing a portion of your future death benefit early.
As a result, using this benefit may reduce the amount that is ultimately paid to your beneficiaries.
The exact reduction in the death benefit, as well as any applicable fees or other adjustments, should be reviewed in the terms of your specific policy.
Does This Rider Cost Extra?
It depends on the insurance company and the type of policy.
Some life insurance policies may include an Accelerated Death Benefit Rider without a separate premium, while others may have different costs, conditions, or limitations.
That is why it is important not to compare life insurance policies based only on the monthly premium.
Ask your insurance agent:
If I experience a serious illness while I am still alive, what benefits does this life insurance policy provide?
Why Are Living Benefits Important?
Life insurance is primarily designed to provide financial protection after the insured person passes away. However, some modern life insurance policies may also provide certain benefits during the insured person’s lifetime when specific eligibility requirements are met.
When choosing life insurance, in addition to the death benefit, you may want to review features such as:
Accelerated Death Benefit
Terminal Illness Benefits
Chronic Illness Rider
Critical Illness Rider
Long Term Care Rider
The availability, eligibility requirements, limitations, and benefits of these features vary by insurance company and policy.
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