How Accelerated Death Benefit Riders Work

iQuanti: Many life insurance plans let you add optional coverage, or riders, to your policy. These riders are a great way to get more coverage, customize your policy to your needs, and provide extra financial security to your loved ones.

One rider many policyholders choose to add to their life insurance policy is called an accelerated death benefit rider. Buying this rider gives you the chance to access the death benefit while you're still alive. Below, we'll discuss accelerated death benefit riders and how they work in more detail, along with some of the benefits they offer. 

What is an accelerated death benefit rider?

An accelerated death benefit rider is a type of life insurance policy add-on that lets you receive part or all of your death benefit while you're still alive. Many insurers include accelerated death benefit riders in their life insurance policies. If not, you can usually add it to your policy for an additional cost. This is something you should keep in mind when searching for a life insurance quote that works for you and your loved ones.

How do accelerated death benefit riders work?

If you become seriously ill, you can contact your life insurer to receive a portion of your death benefit payout if you qualify. Depending on the policy, you can receive the proceeds as a lump sum or periodic payments. You'll need to provide proof of illness, such as a diagnosis, to qualify for your death benefit payout.

Here are four common types of accelerated death benefit riders:

• Critical illness riders: These riders pay out a portion of your death benefit if you get a major diagnosis.
• Terminal illness riders: You can receive the early death benefit from this rider if you're diagnosed with a terminal illness, such as cancer or late-stage kidney failure.
• Chronic illness riders: These riders pay out your death benefit if you can't perform basic activities like eating or getting dressed due to a diagnosed chronic illness.
• Long-term care riders: These riders provide additional coverage for nursing home or long-term care needs, and will cost more and require separate underwriting.

Benefits of accelerated death benefit riders

Accelerated death benefit riders come with many benefits, including:

1. They offer financial security and flexibility if you're incapacitated

Accelerated death benefit riders provide you and your loved ones with financial security if you experience a major health issue. You can use the funds from the accelerated death benefit to cover medical expenses related to illness or other costs, such as lost job income, while you're incapacitated. This can help your family remain financially stable during a time of need.

2. Your policy may include additional riders

Some life insurers include accelerated death benefit riders in the cost of your policy. This way, you won't have to worry about paying more in premiums for additional coverage.

3. The death benefit is generally non-taxable

Accelerated death benefits are typically not taxed as income. This provides you and your loved ones with more money to cover the costs associated with your illness. But keep in mind that accessing a portion of your death benefit while you're still alive will reduce the total payout your beneficiaries will receive once you pass away.

The bottom line

Accelerated death benefit riders offer you more flexibility and control over your coverage. With one of these riders, you can be financially prepared in the event that a critical illness occurs. 

When looking for a life insurance policy, make sure you compare several life insurance quotes and policy terms, including what riders are available. Doing so can help ensure that you get the best policy for your needs.