
Life insurance accelerated benefit riders began to emerge in the 1980s and 1990s. Initially, these riders were designed to provide policyholders with access to a portion of their death benefit in case of terminal illness.
Over time, the concept evolved to include various conditions, such as chronic and critical illnesses. These “living benefit” riders gained popularity as awareness of financial planning and health-related expenses increased, offering policyholders greater flexibility and financial support during strenuous times.
Accelerated benefits in life insurance policies allow policyholders to access a portion of their death benefit while they are still alive, typically in the event of a terminal illness or serious medical condition.
HOW IT WORKS
- Eligibility : Usually triggered by a terminal, chronic, or critical illness diagnosis by a licensed healthcare practitioner.
- Payout : You can access a percentage of the death benefit, which can help cover medical expenses, living costs, or other financial needs.
- Impact on Death Benefit : Impact on Death Benefit: The amount you withdraw will reduce the total death benefit available to your beneficiaries upon your passing.
Benefits
- Financial Relief : Provides immediate funds to help with costly medical treatments or other expenses.
- Flexibility : Allows you to use the funds in a way that best suits your situation.
Considerations
- Policy Terms : Not all life insurance policies offer accelerated benefits and terms can vary widely.
- Tax Implications: Generally, the amount received is not taxable, but it’s wise to consult a tax professional.

- Critical Illness : with certain policies, specified medical conditions that may qualify for the critical illness benefit include heart attack, cancer, stroke, major organ transplant and kidney failure.
- Chronic Illness : with certain policies, the insured may qualify if they are expected to be permanently unable to perform, for at least 90 consecutive days, at least two activities of daily living or require substantial supervision due to severe cognitive impairment.
- Terminal Illness : generally, if the insured has been certified bya physician that they have been diagnosed with a medical condition which results in a life span of 24 months or less, the insured can accelerate the death benefit while they are still a live.
Accelerated death benefits can be a great addition to your life insurance policy. If you’re considering these options and would like more information our office Pacific Insurance Group would be happy to help.
