Your policy may offer an accelerated death benefit and you may not even know it.
When you purchased your life insurance policy, an accelerated death benefit option may have been included along with the other terms and conditions of the policy. If it did not come with your life insurance policy, you usually have the option of adding a rider to include such a provision.
Life insurance policies are typically used to provide benefits to a beneficiary or beneficiaries of the policy owner upon his or her death. When you are able to accelerate benefits, you get some or all of your death benefit while you are alive. The amount that you are eligible to receive depends upon the terms of your contract, the face value of your policy and the state in which you live.
The maximum amount you can receive may be reduced by any interest lost by the life insurance company by paying out your benefits early. It will also be reduced by any outstanding loans you may have received prior to taking the accelerated death benefit option. You may also be charged a small service fee for exercising this option. Any unused death benefit that is remaining in your account after your death will be distributed to your beneficiaries.
If you are eligible for an accelerated death benefit you may want to exercise that option. Doing so can make funds available so you can pay out of pocket medical expenses or for the cost of long-term care. If you are diagnosed as being a terminally ill individual, you could qualify for an accelerated death benefit.
According to 26 USCS § 101(4)(A), a terminally ill individual means an individual who has been certified by a physician as having an illness or physical condition which can reasonably be expected to result in death within 24 months or less after the date of certification.
You may also qualify for an accelerated death benefit if you are chronically ill. According to 26 USCS § 7702B(2)(A), you are a chronically ill individual if you are unable to perform at least 2 activities of daily living, such as eating or bathing, without substantial assistance from another individual. The Code covers both physical and mental impairment.
Other circumstances such as being struck with a catastrophic or acute illness can make you eligible for these early payments, as can permanent confinement in a nursing home. In general, the combination of diminishing health and a shorter life expectancy are the main factors your life insurance company will consider to determine eligibility.
If you do not qualify for an Accelerated Death Benefit
Secondary Market for Life Insurance
If you can not qualify with your life insurance company, you have the option of applying for a life insurance loan in the secondary market for insurance. A third party company may be able to help you meet your financial needs by making you a loan against the death benefit of your life insurance policy. The rules are more relaxed than they are with most insurance companies and there are more situations that can lead to approval of a life insurance loan in the secondary market for insurance.
Although you may be going through some very trying times, you need to get your policy valued. If you do not have the strength or energy to do it yourself, you can get a family member to find out for you. Once you have the information, you can make the choice over whether it would be more beneficial to seek funds from your life insurance company or through a life insurance loan in the secondary market for insurance.