DEFINITION of 'Accelerated Option'

This term refers to an option in an insurance contract, usually in the form of a rider, that allows for accelerated benefits or partial benefits sooner than they would otherwise be payable. Alternatively, in life insurance contracts, an accelerated option can refer to the option that allows the policy holder to apply the accumulated cash value to pay off the policy.

BREAKING DOWN 'Accelerated Option'

One form of an accelerated option is the accelerated death benefit rider in a whole life insurance policy. The terms and conditions of receiving the benefits are outlined in advance, and almost always include a provision for benefits if the policyholder becomes terminally ill. Another form is the option to use the cash value of the policy to prepay the remaining balance of premiums due in a lump sum payment.

RELATED TERMS
  1. Living and Death Benefit Riders

    Living and death benefit riders are a descriptive class of contractual ...
  2. Accelerated Benefits

    A clause in certain life insurance policies that enables the ...
  3. Add To Cash Value Option

    A common benefit option on life insurance policies wherein the ...
  4. Term Life Insurance

    A policy with a set duration limit on the coverage period instead ...
  5. Accumulation Option

    A policy feature of permanent life insurance that allows policyholders ...
  6. Universal Life Insurance

    A type of flexible permanent life insurance offering the low-cost ...
Related Articles
  1. Financial Advisor

    A Closer Look At Accelerated Benefit Riders

    Accelerated benefit riders can allow policy holders to access the death benefit in their life insurance policy while they are still living if they meet certain conditions. Knowing what you get ...
  2. Insurance

    How Long-Term Care Riders on Life Insurance Work

    What is the difference between Accelerated Death Benefit for Chronic Illness and Long-Term Care Riders offered on life insurance policies?
  3. Insurance

    Let Life Insurance Riders Drive Your Coverage

    Find out how these additional benefits can help you customize your policy.
  4. Financial Advisor

    Living And Death Benefit Riders: How Do They Work?

    Find out how these different riders work, and which type is right for you.
  5. Financial Advisor

    Should You Buy A Life Insurance Disability Rider?

    Does it make sense to pay an additional cost for a waiver of premium rider on a life insurance policy?
  6. Financial Advisor

    Getting Life Insurance in Your 20s Pays Off

    Find out how Americans in their 20s can benefit from a well-thought-out life insurance policy, especially if they are able to build cash value for retirement.
  7. Financial Advisor

    How Life Insurance Settlements Are Evolving

    The life insurance industry marches forward by offering more ways that consumers can access the death benefits in their policies. Here's one of the newest.
  8. Retirement

    How Survivorship Life Insurance Works

    Should you buy a survivorship life insurance policy?
  9. Financial Advisor

    Which Life Insurance is Right For You?

    Consumers have choices when it comes to life insurance. Knowing your future needs for cash or retirement can make the difference in what you select.
RELATED FAQS
  1. 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 ... Read Answer >>
  2. Does the seller (the writer) of an option determine the details of the option contract?

    The quick answer is yes and no. It all depends on where the option is traded. An option contract is an agreement between ... Read Answer >>
Hot Definitions
  1. Ponzi Scheme

    A fraudulent investing scam promising high rates of return with little risk to investors. The Ponzi scheme generates returns ...
  2. Dow Jones Industrial Average - DJIA

    The Dow Jones Industrial Average is a price-weighted average of 30 significant stocks traded on the New York Stock Exchange ...
  3. Revolving Credit

    A line of credit where the customer pays a commitment fee and is then allowed to use the funds when they are needed. It is ...
  4. Marginal Utility

    The additional satisfaction a consumer gains from consuming one more unit of a good or service. Marginal utility is an important ...
  5. Contango

    A situation where the futures price of a commodity is above the expected future spot price. Contango refers to a situation ...
  6. Stop-Loss Order

    An order placed with a broker to sell a security when it reaches a certain price. A stop-loss order is designed to limit ...
Trading Center