Many life insurance companies allow you to receive money from your policy if you become terminally ill. This is known as an accelerated death benefit, which would either pay you a lump sum or in monthly payments that will be deducted from the value of the policy. The benefits are granted prematurely in order to help pay medical costs to terminally ill patients, or to provide relief from long-term care expenses.
This concept goes back to the 1980s, when costly medical treatment drove terminally ill AIDS patients into insurmountable debt. Over the years, policy language has been expanded to include other terminal and chronic illnesses.
Your life expectancy usually has to be 12 months or less from when you apply for the accelerated benefits. Some of the potential triggers for eligibility to receive accelerated benefits are as follows:
· Diagnosis of a terminal disease or condition for which death is likely to occur within a specific amount of time.
· Occurrence of one of several conditions that limit life span (i.e. heart attack, cancer, stroke, coronary artery bypass surgery, kidney failure, organ transplant, AIDS, paraplegia, and loss of limb or eyesight.)
· The need for long-term or permanent care due to inability to perform daily activities (eating, toileting, transferring, bathing, dressing, continence.)
In most cases, accelerated death benefits are available at no additional cost, but you may be required to elect this feature as a rider when applying for your policy. Accelerated death benefits generally cap out at 50-75% of your policy's death benefit with the remainder being paid to your beneficiary at death.
The laws in your state may determine whether you will receive a lump sum or monthly payments, otherwise you have the ability to choose which would best benefit you. Currently, accelerated death benefits are not subject to federal income tax, and in most states, are not subject to state income tax. To learn more about life insurance options call an agent today at 314-351-HALO(4256)