Accelerated Death Benefit Details

ADB is allowed if the individual is critically ill or has less than two years of living. The insured is entitled to continue making the policy payment even if they are receiving the advance. The policyholder is not permitted to repay the advance they're receiving. However, the amount is deducted from the total amount due when the death benefit becomes mature. If you are interested in the policy, you should ask the insurance company if the option is included. If you find that the clause is not included, you can request the insurance company to add the clause to the policy. The insurance company may, however, request additional payments from the policyholder.

Most insurance companies prefer to pay the benefit in monthly installments, while others pay in a lump sum. The accelerated death benefit can be high as 95% of the total death benefit. Insurance companies always put a maximum amount of the ADB policyholder can get depending on the life expectancy. The insured also makes the final decision regarding how much ADB they need to receive. Accelerated Death Benefits in most countries are not taxed.

Any policyholder willing to apply for the ADB must have a medical letter indicating their illness. Upon receiving the medical letter, the insured takes it to the insurance firm, assessing life expectancy. In about 4-6 weeks, the company releases the advance benefit amount to the insured. When a person receives an accelerated death benefit, they have the freedom to use the benefit the way they desire. Most of the time, families that receive the benefit usually spend it caring for their loved ones while receiving medical treatment.

Real-World Example of Accelerated Death Benefits

Life insurance companies, such as John Hancock, provide accelerated death benefits. From the company website, John Hancock usually gives 50 percent of qualifying ADBs. The maximum lifetime accelerated death benefit is $1,000,000. Also, from the website, if the company issues any rider and you are not satisfied, the company always gives a grace period of 30 days to lodge complaints.

The policy and insurance company will determine the ADB qualifying factors. The information varies from one insurance firm to another. The age of the insured (policyholder's age) does not affect the eligibility to receive the advance. However, what matters is the life expectancy of the individual.

For any policyholder to qualify for the policy in any insurance company, some of the requirements include:

  • The policyholders should have a recommendation letter from qualified medical personnel stating they have less than two years to live.
  • Policyholders who have a longer life expectancy but have severe illnesses are also entitled to the policy.
  • Some insurance companies allow policyholders to receive ADBs if they have illnesses such as cancer.
  • ADB is also allowed to policyholders who cannot perform necessary daily activities (mobility, grooming, bathing, etc.) and need service care that may take a long time or are for those confined to a nursing facility.
  • Policyholders who have Amyotrophic Lateral Sclerosis (ALS) are entitled to apply. People with organ failure or requiring artificial life support may qualify for this policy depending on their state laws.
  • Any individual who is disabled is usually entitled to receive the advances without considering their life expectancy.