What is an accelerated death benefit?

An accelerated death benefit (ADB) is a life insurance rider that pays out some of the death benefit while you’re alive if you’re terminally ill.

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By

Tory CrowleyAssociate Editor & Licensed Life Insurance AgentTory Crowley is an associate editor and a former licensed insurance agent at Policygenius. Previously, she worked directly with clients at Policygenius, advising nearly 3,000 of them on life insurance options. She has also worked at the Daily News and various nonprofit organizations.&Nupur GambhirSenior Editor & Licensed Life Insurance ExpertNupur Gambhir is a licensed life, health, and disability insurance expert and a former senior editor at Policygenius. Her insurance expertise has been featured in Bloomberg News, Forbes Advisor, CNET, Fortune, Slate, Real Simple, Lifehacker, The Financial Gym, and the end-of-life planning service Cake.

Edited by

Antonio Ruiz-CamachoAntonio Ruiz-CamachoAssociate Content DirectorAntonio helps lead our life insurance and disability insurance editorial team at Policygenius. Previously, he was a senior director of content at Bankrate and CreditCards.com, as well as a principal writer covering personal finance at CNET.
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Reviewed by

Maria FilindrasMaria FilindrasFinancial AdvisorMaria Filindras is a financial advisor, a licensed Life & Health insurance agent in California, and a member of the Financial Review Council at Policygenius.

Updated|3 min read

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An accelerated death benefit rider (ADB) is a living benefits rider. This policy add-on lets you withdraw from your life insurance policy’s death benefit if you have a terminal illness. The accelerated death benefit rider is usually included in your policy at no extra cost to you.

This money is most often used toward medical expenses or anything that would alleviate any financial burden during your final years. However, withdrawing from the death benefit payment early will reduce the amount of money your beneficiaries get from your policy after you die.

If youre diagnosed with a terminal illness, it may be financially prudent for you to use your own savings instead of withdrawing from the death benefit of your life insurance policy.

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How does the accelerated death benefit work?

If you exercise an accelerated death benefit rider, youll receive a portion of the death benefit while youre still living. Some insurance companies will let you withdraw up to 50% of the death benefit, but the exact amount varies for each insurer.

The remainder of your life insurance benefit still goes to your beneficiaries after you die. Any money you collect from the accelerated death benefits rider is not subject to federal income tax, nor will the amount your beneficiary receives be taxable.

All of the life insurance companies Policygenius partners with offer the accelerated death benefit rider for free. However, the rider may not be available in certain states

Accelerated death benefit fees and restrictions

Accelerated death benefits come with some limitations. For example, qualifying events that allow you to exercise the rider will be written in your insurance contract. Not all illnesses will qualify you to use the rider.

Additionally, if you have permanent life insurance and take out a loan against your policy, your accelerated benefit will be paid to you minus any outstanding loan amount.

Some life insurance providers charge a one-time processing fee of $150 to activate the accelerated death benefit rider and get the funds.

Others treat the accelerated death benefit payment as a lien, which accrues interest. So when life insurances pay out the death benefit to your beneficiaries, they will deduct the amount you withdrew plus interest.

Who qualifies for an accelerated death benefit?

Most insurance companies will want to see a certification from a doctor or medical professional stating youre terminally ill and have a life expectancy of fewer than 12 to 24 months.

If you’re not terminally ill, you may still qualify for accelerated benefits. Some providers will pay out if youre critically ill, chronically ill, or need long-term care. You’ll want to work with your insurance provider to confirm your eligibility for these benefits.

What does the accelerated death benefit cover?

Youll receive the accelerated death benefit as a lump-sum payment and it can be used however you want. Most people use the money for:

  • Medical expenses 

  • Hospice

  • Nursing home

  • Private caretaker

As a life insurance agent, advising thousand of clients, I always recommended people to include this rider on their policies. Adding the accelerated death benefit rider is a good decision because its free to add and optional to use if youre ever diagnosed with a terminal illness.

→ Read more about life insurance riders

Frequently asked questions

What does an accelerated death benefit do?

An accelerated death benefit is a provision in a life insurance policy that allows you to claim part of the death benefit while you’re still living.

How much does an accelerated death benefit cost?

An accelerated death benefit rider is a free add-on to a term life insurance policy. If you use the rider to withdraw money from your life insurance policy, it will not be taxed.

When would an insurer pay out an accelerated death benefit?

The exact terms that allow you to exercise this rider will be written out in your life insurance policy. Generally, you’re able to exercise this rider if you have been diagnosed with a terminal illness and told that you have less than two years to live.

Authors

Tory Crowley is an associate editor and a former licensed insurance agent at Policygenius. Previously, she worked directly with clients at Policygenius, advising nearly 3,000 of them on life insurance options. She has also worked at the Daily News and various nonprofit organizations.

Nupur Gambhir is a licensed life, health, and disability insurance expert and a former senior editor at Policygenius. Her insurance expertise has been featured in Bloomberg News, Forbes Advisor, CNET, Fortune, Slate, Real Simple, Lifehacker, The Financial Gym, and the end-of-life planning service Cake.

Editor

Antonio helps lead our life insurance and disability insurance editorial team at Policygenius. Previously, he was a senior director of content at Bankrate and CreditCards.com, as well as a principal writer covering personal finance at CNET.

Expert reviewer

Maria Filindras is a financial advisor, a licensed Life & Health insurance agent in California, and a member of the Financial Review Council at Policygenius.

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