Accelerated Death Benefit

Written by:
Image
Paul Tracy

Paul has been a respected figure in the financial markets for more than two decades.

Prior to starting InvestingAnswers, Paul founded and managed one of the most influential investment research firms in America, with more than 2 million monthly readers. While there, Paul authored and edited thousands of financial research briefs, was published on Nasdaq. com, Yahoo Finance, and dozens of other prominent media outlets, and appeared as a guest expert at prominent radio shows and i...

View all posts
Updated September 30, 2020

What is an Accelerated Death Benefit?

An accelerated death benefit is a portion of a life insurance policy that allows policyholders to receive their death benefits before they actually die.

How Does an Accelerated Death Benefit Work?

For example, let's say Jane Doe bought a life insurance policy with an accelerated death benefit. The life insurance policy will pay her son and daughter $500,000 upon her death (this is called the death benefit).

Jane bought the policy when she was 45; now she is 75 and has been diagnosed with Alzheimer's disease. The disease is aggressive, and Jane's doctors say she is likely to die within 12 to 18 months. Jane's treatments are very expensive.

To obtain cash for her living and medical expenses, Jane taps into the accelerated death benefit of her policy. This gets her a portion of her policy's death benefits now—say, $300,000.

Of course, this reduces the amount available to Jane's son and daughter upon her death, and the sudden inflow of $300,000 might jeopardize her ability to qualify for Medicaid or even reduce her Social Security benefits.

Why Does an Accelerated Death Benefit Matter?

The conditions for using a policy's accelerated death benefits vary by issuer, and often the issuer requires the insured person to continue making premium payments even when he or she is receiving accelerated death benefits. However, in general, buying a policy with an accelerated death benefit provides a way to pay for expensive senior care when it's too late to purchase long-term care insurance.

Ask an Expert about Accelerated Death Benefit
At InvestingAnswers, all of our content is verified for accuracy by Paul Tracy and our team of certified financial experts. We pride ourselves on quality, research, and transparency, and we value your feedback. Below you'll find answers to some of the most common reader questions about Accelerated Death Benefit.
Be the first to ask a question

If you have a question about Accelerated Death Benefit, then please ask Paul.

Ask a question

Read this next

Don't Know a Financial Term?
Search our library of 4,000+ terms
 - profile
Ask an Expert about Accelerated Death Benefit

By submitting this form you agree with our Privacy Policy

Share
close