What is an Accelerated Death Benefit?

Accelerated death benefits are terms included in a life insurance contract that make it possible for a terminally ill policyholder to receive a portion of the life insurance payment before death actually takes place. Sometimes referred to as a living benefit option, the accelerated death benefit can help to pay for end of life expenses such as hospice care and other treatments and procedures that help to make the last months of the individual’s life as comfortable as possible. Most insurance providers offer accelerated death benefits policies for both individuals and as part of group coverage offered through employers.

There are usually specific conditions that must be met in order to claim an accelerated death benefit. The most common has to do with providing proof that the insured party is indeed terminally ill, and is not expected to live beyond a certain amount of time. Many insurance companies that offer this type of benefit usually require that healthcare professionals provide documents that indicate the insured party will not live for more than one calendar year from the date that the benefit is claimed.

It is not unusual for an accelerated death benefit provision to be included in life insurance coverage provided through employers. When this is the case, individual employees have the option of accepting or rejecting this particular provision. If the employee elects to include the living benefit option, a portion of the face value of the policy will be paid to the policyholder as long as there is proof of a terminal illness. Some companies also make provisions to pay the portion to a beneficiary or primary caregiver in the event that the policyholder is incapacitated by his or her medical condition, and cannot initiate the claim personally.

In most cases, an accelerated death benefit can be paid in one lump sum, or be disbursed in a series of installment payments over a period of time. With both scenarios, the funds can be used to help make the last days of the policyholder as comfortable as possible. There is usually no type of restriction on how the funds can be used, as long as the policyholder qualifies for the receipt of this partial payment of death benefits. This means that a terminally ill patient who wishes to go on one last vacation with loved ones can use the payment to fund the trip, or use the funds collected from the accelerated death benefit to secure around the clock medical care if necessary.