When we purchase life insurance, it is an investment in the future: we want to make sure that the people who are important to us will receive the money that they need to take care of our burial expenses and to help them move on with their lives. Unfortunately, there are some catastrophic health events that may make it more necessary or sensible for us to take advantage of our insurance policy’s death benefit for ourselves while we are still alive.
Being diagnosed with a terminal illness, or an acute illness that is expected to dramatically shorten our expected life span without extensive, expensive treatment are two examples of when this may be the case. Others include requiring an organ transplant or long-term care or even being permanently confined to a nursing home. When you need to avail yourself of your own life insurance policy’s death benefit, you can contact your life insurance company and ask about accelerated benefits for life insurance. Your policy may contain provisions for this, or you may need to take out a rider against the policy.
The accelerated benefit payment is general available on permanent individual life insurance policies that have a face value of $25,000 or more. Some term life policies offer the opportunity, and so do some group policies. When you decide to ask for the benefit you may need to pay a small amount for the ability to do so, while some policies may already have included the cost in your premium.
In most cases, when you ask for accelerated benefits you can take out between 25 percent of the death benefit and 95 percent, depending upon the face value and what the original terms are of your policy. Some states have specific rules limiting the amount that you can take out, and some companies are willing to provide you with the full face value of the policy less any interest that they lose if you accelerate early in your plan, and if your health improves you do not have to pay back the amount that you have received. There is usually a small service charge, and if you decide to take out an amount that is less than the complete death benefit of the policy, your beneficiary will receive the remainder after your death, as per the original terms of the policy.
Every insurance company has its own policy and guidelines for accelerated death benefits, so before you make the decision to go ahead with this, it is a good idea to contact them and find out how much they charge, and what limitations may be imposed by your state government. You also need to give careful consideration to whether taking out an accelerated benefit will be better than leaving the policy in place for the benefit of the originally-named beneficiaries.
Funds for Living
The ability to take out accelerated benefits against your life insurance policy is specifically intended for those who are facing financial hardships as a result of serious health conditions. Fifth Season Financial offers Funds for Living Program, which is another option for those who are in this difficult situation. The Funds For Living Program offers a life insurance advance with more flexibility. When you take out a life insurance advance with Fifth Season Financial you no longer have to pay any further premiums on your policy and are able to use the money for any purpose. In most cases named beneficiaries still receive a death benefit after the insured passes, and the process is easy and friendly. Call us today to learn more.