Accelerated benefit riders in life insurance policies are still a new concept for many. Naturally, clients have various questions about it. One of the most common questions we receive is what is the process of accelerating life insurance benefits? In other words, how would have I access to the benefit?
In this guide, we would answer that and go over the necessary steps to accelerate/access your living benefits in a life insurance policy.
If you have any specific questions or would like us to take a look at your situation, simply reach out to us. You can give us a call, send us a message, or simply complete the instant quote form on this page.
What we would cover
Before jumping in we wanted to advise you that these are just general guidelines. Typically the process of accelerating life insurance benefit would follow the steps outlined below. However, every company may have a different procedure. Please be sure to check with the life insurance company and read your policy.
Decide between partial or full acceleration
This would be the first step in the process: You would need to decide if you would like to file for a partial or full acceleration. What does that mean?
Some companies would allow you the option to file for a complete acceleration, in other words, accelerate your entire death benefit while others would only allow for a partial acceleration. Let’s look at the example below to better demonstrate:
Example of a full acceleration:
Tim suffers from a heart attack and he needs to access his entire death benefit today. So, he files to accelerate his full $500,000 benefit.
During the review stage (which we would cover shortly), the company assesses his life expectancy after the medical event and applies an actuarial discount.
The company makes an offer to Tim of $300,000. In other words, the carrier would write Tim a check for $300,000 today and he would no longer have any life insurance benefit left. His term life insurance policy would cancel.
Now, we know many of our clients have expressed concern about what happens to the other $200,000 in death/policy benefit? Well, you waive it and in exchange for early payment. The key here is that living benefits would give you access to money TODAY. You could use the benefit to pay off medical bills, keep up with the mortgage payments while out of work, hire help or seek alternative treatment. The choice is yours.
Living benefits gives us a choice. You do not have to accelerate a death benefit, simply if you’ve suffered a qualifying medical condition. But again, you have the choice to do so if needed.
Example of a partial acceleration:
Let’s look at the same example. However this time instead of accelerating the full $500,000 benefit, Tim decides to accelerate only $200,000.
After the same calculations and process explained in the first example, Tim could expect:
- A check for $120,000 TODAY
- Has a remaining life insurance policy of $300,000
Now, we want to point out that these are just estimates. Your offer would be based on your situation. The companies would access your current health and your life expectancy after the event. The offer you would receive would be strictly based on that and NO agent could guarantee how much the payment would be (expect if pre-determined in the policy).
File a claim
During this step, you would need to reach out to the company and file a claim for an acceleration. The carrier would provide you with the necessary forms and steps to do so.
Please note that there may be a waiting period before you are eligible to file a claim also you would need to report within 12 months immediately proceeding with the qualifying illness.
After receiving the claim forms, the company would request a copy of your medical records. In addition, the company may request a second option.
Please note, if you are residing outside of the US at the time of the claim, you would need to see a US doctor accelerate your benefits.
Receive an offer
After the company reviews your records and determines that benefits are payable, they would send you an election form. On the form, they would include the offer, based on your requested type of acceleration. Typically, you would have 15 days following the receipt of the offer to decide if you would like to accept it and accelerate your benefit.
Keep in mind that you are under NO obligation to accept the offer.
After you accept an offer, the company would send you the payment. Typically, checks are mailed within 5-10 business days. Most payments are in the form of a lump sump.
We would like to advise you that it is your decision whether to file a claim or not under accelerated benefit riders. The factors to consider are your health and financial situation.
The companies are trying to streamline the process of accelerating life insurance benefits as much as possible. You would need to decide if you would file for full acceleration, submit a claim form and provide access to your medical records. Once they review the information and confirm eligibility, they would make you an offer. Should you decide to accept, they’ll send you the payment.
We hope this provides you with a general idea of what you can expect from your life insurance with living benefits.
We hope you find this helpful and are looking forward to working with you.