How does Life Insurance & Accelerated Death Benefits Work?
Life insurance policyholders may have the option of adding ‘riders’ to their policies to cover particular circumstances. One of these riders known as an ‘accelerated death benefit’ may be useful in cases of a serious and life-threatening disease.
With the addition of this rider, the policyholder may be able to draw on the death benefit in advance to pay for medical care. It’s important to note that this only applies in cases of severe illnesses such as terminal cancer, or another disease requiring extensive medical intervention.
When the death benefit is drawn on in advance in this manner, it’s important to be aware that the amount due to beneficiaries upon death will be reduced. In cases where the policyholder recovers from the illness, he or she is not generally required to pay back the benefit. However the value of the benefit will have decreased by the amount previously drawn on it.
In some cases of an accelerated death benefit riders, insurance providers only charge extra for it if it is actually utilized. In other cases, insurers may charge extra for the rider. This is something that should be checked with the life insurance agent when taking out the policy, or when taking the option of adding a rider to an existing policy.
Contact Harrington Insurance Agency in San Jose, CA today if you any insurance needs that need to be met.