Life Insurance Accelerated Benefits

Life insurance policies are complex.  They are even complex for insurance agents to understand.  Within life insurance policies are various riders or add-ons which increase the complexity of the policy.  This is a quick discussion of Life Insurance Accelerated Benefits Riders.

Life Insurance Accelerated Benefits Riders are life insurance policy add-ons designed to help people who are facing a terminal illness (imminent death), critical illness (death threatening illness), or chronic illness (debilitating illness) deal with the financial strains which usually follow.  Typically Accelerated Benefits Riders work by paying out a percentage of the death benefit prior to death; the percentage may be a small monthly benefit or a lump sum equal to 25%, 50%, or 100% of the death benefit.  These policy add-ons are usually free of charge and most insurance agents will automatically add them to a life insurance policy without completely understanding the constraints of the rider.

What you don’t know, or your insurance agent doesn’t know, about the Accelerated Benefits Riders on your policy may hurt you!

Did you know… Some life insurance companies require a licensed medical practitioner to sign an affidavit stating the condition is permanent.  With the advances in medicine and medical technology, how many doctors will state a condition is permanent?

Did you know… Some life insurance companies require a 2 year waiting period before they will pay the accelerated benefits for a Chronic Illness and as long as 30 days for a Critical Illness.

Did you know… Some life insurance companies require the life insurance policy to be in-force for a certain period of time (up to 2 years) before they will pay the accelerated benefits rider.

Did you know… Some life insurance companies can arbitrarily reduce the amount of the accelerated benefits available.

Did you know… Some life insurance companies cap the amount available to the policy holder for terminal illness benefits no matter how short the expected life is.

Life insurance policies may look the same to a lot of people, including most insurance agents, but they are all far different in small ways.  Those small ways can mean big differences.  Understanding the language of the policy and the accelerated benefits riders is key, and should be a requirement for insurance agents.  Subsequently, it is in your best interest that your insurance agent help you choose a life insurance policy tailored to you.  For example, if there is a history of Alzheimer’s (chronic illness) in your family it would behove you to select a life insurance policy with better accelerated benefits riders for chronic illness even if that policy costs slightly more than the next.