Accelerated Death Benefit Definition
Written on August 4, 2010 – 4:43 am | by Eden Rudduck
The Dictionary of Insurance Terms and Definitions
An accelerated death benefit is the payment of a death benefit prior to the death of the insured. Life insurance policies may have a provision (it may be silent, standard, or attached as a rider) which promises an accelerated death benefit in the event of an exceptional medical condition, such as a terminal illness, disability, or need for long-term care. Under these circumstances—particularly that of a need for long-term care—accelerated benefits are of particular value, since the medical conditions of concern often introduce pressing financial needs, such as the need to alter one’s living arrangements and hire a professional caregiver.
Accelerated death benefits may be less in value than the benefit that the policy would pay in the event of the insured’s death. It is often 70 or 80 percent of the policy’s face value (ordinary death benefit).
An alternative to accelerated benefits is viatical settlments. If yours is a cash value life insurance policy and if you are terminally ill, you can probably find a buyer who is willing to purchase ownership of your life insurance policy. The buyer of a life insurance settlement is usually a financial company, and as with an accelerated death benefit, the payment is usually in the neighborhood of 70 percent of the policy’s face value.