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I've been shopping for a new life insurance policy and read that I could collect the death benefit before I die. How does that work?

I have an older policy from years ago but was looking to change to a new policy and I"m trying to compare the different benefits of each policy. Thanks!

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  Answers  |  3

September 12, 2017

Years ago, life policies were simpler. They paid a death benefit after the insured passed away. Then, competitive carriers responded to consumer desires for more “bells and whistles” by adding some things. Additional benefits may be called riders, which may come at an additional cost or they may come at no cost. You may see them referred to as “accelerated benefits” or as “living benefits” because the death benefit can be accessed in part or in whole before the insured passes away. Why might this be desirable? Because sometimes, huge medical debts may pile up in the months or years leading up to our passing away. Accelerated benefits help us (and our heirs) pay for that treatment. The death benefit is reduced when it is accelerated, and the balance is paid when the insured passes away.

Though there are others, here are three accelerated benefits to look for: Terminal Illness, Chronic Illness, and Critical Illness. Upon diagnosis, these riders kick in and do their work. Not all policies have all of these, though most will include the Terminal Illness benefit. Keep reading the small print: it is often as important as the larger print.

$commenter.renderDisplayableName() | 12.16.17 @ 11:12

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November 08, 2017

If you are over the age of 65 and death benefit of the policy is $100,000 or more there are companies that will assess your life expectancy and pay you a percentage of the death benefit. In most case, it will be more than cash value in the policy. They will also buy term policies if they can be converted to Permanent one. Hope this helps.

$commenter.renderDisplayableName() | 12.16.17 @ 11:12

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November 08, 2017

Newer policies have a feature where they can be used for long term care now. These policies tend to be pretty expensive but offer a fixed premium for a LTC benefit/life policy. Regular LTC premiums can and most likely will rise. So while not a perfect match for LTC these policies offer another option.

There are also a critical illness riders now in many policies. These aren't LTC plans, but more of a way to use death proceeds prior to dying. Usually a person has to have been given 24 months or less to live. The money taken early, is deducted from the death benefit.

$commenter.renderDisplayableName() | 12.16.17 @ 11:12

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