Reviewed by Sep 30, 2020| Updated on
Accelerated benefits refer to certain clauses in life insurance policies that highlight the ways of getting a payout before the insured person's death. Events that allows the insured to receive a payout before death are: terminal illness, long-term high-cost illness, permanent nursing home confinement, and a medically incapacitating health condition.
The percentage of payout one can receive varies based on the insurance company terms. The major factor they consider in the above cases is the insured's proximity to death. A sum of 25%-100% of the death benefit will be given as an early benefit. The accelerated benefit can also be termed as a living benefit.
Availing insurance policies that offer accelerated benefits will allow the insured to be able to afford their living expenses when an unexpected incident makes them unemployable. Also, if the insured dies within the term of the policy, then the family gets the sum assured of the policy.
Purchasing a policy with accelerated benefits helps the insured to earn daily living expenses during illness. Once the insured passes away, the sum paid can help the family members.
This type of benefit was first introduced in the 1980s to reduce the financial pressure on those who were diagnosed with AIDS.
Accelerated benefits are tax-free if the insured is dying within the next two years.
Any disease that reduces the lifespan of a person can be considered for accelerated benefit.