Accelerated Benefits

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.

BREAKING DOWN '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.