What Is Accelerated Death Benefit Rider?

Why it matters

The money can be used for any purpose, such as medical care or daily living costs. Whatever is paid out reduces the death benefit left for beneficiaries, and some carriers charge a fee or interest. Qualifying conditions, the percentage available, and the cost differ by carrier and state. Under federal tax law, benefits for terminally ill individuals are generally excluded from income, and chronically ill rules are more detailed. Ask a tax professional.

Source: naic.org

Where we use this term

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Related terms

Terminal Illness Rider: A terminal illness rider is an add-on that lets the insured receive part of the death benefit early after a physician certifies an illness likely to cause death within a set time, often 12 or 24 months.
Chronic Illness Rider: A chronic illness rider is an add-on that lets the insured access part of the death benefit early if a licensed health care practitioner certifies a chronic illness, usually the inability to perform daily living activities.
Rider: A rider is an optional add-on to an insurance policy or annuity that changes or adds benefits for an extra cost. It becomes part of the contract once attached.
Death Benefit: A death benefit is the money a life insurance carrier pays to the beneficiary when the insured dies. It is usually paid as a lump sum and is generally income tax free to the beneficiary.
Long-Term Care Rider: A long-term care rider is an add-on that lets the owner use part of a life insurance death benefit or an annuity's value to pay for long-term care expenses if specific conditions are met.

All 241 terms

Why it matters

Where we use this term

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