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. Basket Retention

    An insurance policy that covers exposures to several different ...
  6. Counsel Selection Provision

    A liability insurance provision that allows the policyholder ...
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. Retirement

    What is a longevity annuity?

    Understand all the characteristics of a longevity annuity contract, the purpose of a longevity annuity and what type of investor it appeals to.
  8. Insurance

    How do I determine the face value of a life insurance policy?

    Read about how to determined the face value for any life insurance policy, and see what circumstances can trigger a change in face value.
  9. Options & Futures

    Is short selling a form of insurance?

    Explore short selling and put options. Learn how put options may be used as insurance to protect positions, and costs associated with using this method.
  10. Professionals

    What are some examples of common fringe benefits?

    Learn how offering fringe benefits can be a strategic recruitment and retention tool for employers and drastically increase total compensation for employees.

You May Also Like

Hot Definitions
  1. Command Economy

    A system where the government, rather than the free market, determines what goods should be produced, how much should be ...
  2. Prospectus

    A formal legal document, which is required by and filed with the Securities and Exchange Commission, that provides details ...
  3. Treasury Bond - T-Bond

    A marketable, fixed-interest U.S. government debt security with a maturity of more than 10 years. Treasury bonds make interest ...
  4. Weight Of Ice, Snow Or Sleet Insurance

    Financial protection against damage caused to property by winter weather specifically, damage caused if a roof caves in because ...
  5. Weather Insurance

    A type of protection against a financial loss that may be incurred because of rain, snow, storms, wind, fog, undesirable ...
  6. Portfolio Turnover

    A measure of how frequently assets within a fund are bought and sold by the managers. Portfolio turnover is calculated by ...
Trading Center