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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  |  1

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.

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