Accelerated Death Benefit
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UPDATED: Aug 14, 2020
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A provision or rider that allows you (the policyowner) to receive all or part of the benefits of your life insurance policy while you are alive in the event of a terminal illness. Depending on the insurance company issuing the policy, and the policy form involved, these benefits are paid either on diagnosis of a terminal illnesses, such as AIDS, certain organ transplants, or upon a diagnosis that death within two years is almost certain. Some companies permit payout of some of the face amount of the policy by way of accelerated death benefits in the event of nursing home confinement or other health conditions. The circumstances under which such benefits are available varies from company to company, and the manner the payments are accounted for also can vary, in some as an “advance” against the ultimate benefit to be paid and in others as a loan, to be repaid, in some cases with interest, when the face amount is paid out. Also known as “living benefits.” See also viatical settlements, which involve the sale of a policy of an insured who is terminally ill.