Accelerated Benefits

AAA

DEFINITION of 'Accelerated Benefits'

A clause in certain life insurance policies that enables the policy holder to receive the benefits before death. Accelerated benefits are normally reserved for those that suffer from a terminal illness, have a long term high-cost illness, require permanent nursing home confinement or have a medically incapacitating condition. Some insurance companies differ on how much cash can be pulled out and how close to death the insured has to be in order to receive these benefits. Insurers offer anywhere from 25% to 100% of the death benefit as an early payment.


Also referred to as living benefits.

INVESTOPEDIA EXPLAINS 'Accelerated Benefits'

The accelerated benefit is deducted from the death benefit that will be paid to the beneficiary upon the insured's death. It is paid for by adding the cost to the insurance premium. However, some companies do not add the cost to the premium, but instead charge the policyholder only if and when the holder actually needs this benefit. Universal life insurance policies, other permanent life insurance policies, term life insurance and group term or group permanent life insurance policies can offer this benefit.

RELATED TERMS
  1. Acceleration Life Insurance

    A type of policy that pays a portion (typically 25\% or 50\%) ...
  2. Accelerated Option

    This term refers to an option in an insurance contract, usually ...
  3. Accelerated Death Benefit - ADB

    A benefit that can be attached to a life insurance policy that ...
  4. Beneficiary

    Anybody who gains an advantage and/or profits from something. ...
  5. Commercial Package Policy (CPP)

    An insurance policy that combines coverage for multiple perils, ...
  6. Buffer Layer

    The difference between the primary limit of insurance and any ...
Related Articles
  1. Home & Auto

    Why Your Will Should Name Designated Beneficiaries

    Find out how to make the tough decisions when it comes to choosing who will receive your assets and how they will be paid out.
  2. Retirement

    Pick The Perfect Trust

    Trusts are an estate plan's anchor, but the terminology can be confusing. We cut through the clutter.
  3. Insurance

    How Much Life Insurance Should You Carry?

    Learn how much - if any - insurance you really need.
  4. Options & Futures

    5 Life Insurance Questions You Should Ask

    Confused about $1 million dollar insurance advertising claims? Decide whether they'll pay off for you.
  5. Options & Futures

    Cut Your Tax Bill With Permanent Life Insurance

    Learn how to lower your income tax and avoid estate tax - all while building wealth.
  6. Options & Futures

    Let Life Insurance Riders Drive Your Coverage

    Find out how these additional benefits can help you customize your policy.
  7. Insurance

    Life Insurance: How Much Does Age Raise Your Rate?

    If you need life insurance, try to get it before your next birthday. Here's why.
  8. Insurance

    What Happens If Your Insurance Company Goes Bankrupt?

    When insurance companies go bankrupt or face financial difficulty, it's bad news for policy holders.
  9. Insurance

    How to Use a Waiver of Subrogation

    A waiver of subrogation means that a party to a contract waives the right to allow someone (usually an insurance company) to sue the other party to the contract in case of a loss.
  10. Insurance

    Should You Borrow From Your Life Insurance?

    A loan against the cash value of your life insurance isn't the best way to raise money – but sometimes it's the best choice you have. How to decide.

You May Also Like

Hot Definitions
  1. Fixed Cost

    A cost that does not change with an increase or decrease in the amount of goods or services produced. Fixed costs are expenses ...
  2. Subsidy

    A benefit given by the government to groups or individuals usually in the form of a cash payment or tax reduction. The subsidy ...
  3. Sunk Cost

    A cost that has already been incurred and thus cannot be recovered. A sunk cost differs from other, future costs that a business ...
  4. Technical Skills

    1. The knowledge and abilities needed to accomplish mathematical, engineering, scientific or computer-related duties, as ...
  5. Prepaid Expense

    A type of asset that arises on a balance sheet as a result of business making payments for goods and services to be received ...
  6. Gordon Growth Model

    A model for determining the intrinsic value of a stock, based on a future series of dividends that grow at a constant rate. ...
Trading Center