What You Need to Know About Accelerated Benefits

Serious or life-threatening illness often causes emotional strain and financial burdens. To provide choices to those who are seriously or terminally ill, many life insurance companies now make it possible for policyholders to collect all or part of their death benefits early, thus relieving some of that financial burden.

Accelerated benefits, sometimes also known as "living benefits," are the proceeds of life insurance policies that are paid to policyholders before they die. These benefits are sometimes included in policies when they are sold, but life insurance companies generally offer them as riders or attachments to new or existing politics.

As you read this pamphlet, it's important to remember that accelerated benefits are not intended to replace health insurance or long-term care insurance. They can, however, help out with the great financial needs that frequently result from terminal or catastrophic illnesses. But, collecting accelerated benefits will reduce or eliminate life insurance coverage, so policyholders must carefully consider the needs of their intended beneficiaries; they will receive either a reduced payment or no payment at all when the policyholder dies.

The number of life insurance companies offering accelerated benefits has grown dramatically in the last few years. Today, more than 150 companies offer some type of accelerated benefits, and more than 3 million policyholders have these options in their policies.

If you've already got a life insurance policy, call your producer to find out if accelerated benefits are available to you. *Also, be aware that a growing number of companies are adding these benefits to new individual and group life insurance policies. For information on group life policies, call your human resources department or union to find out if accelerated benefits have been added -- or can be added -- to your employer's group life insurance policy.

*If you have some general questions about life insurance that are not answered in this booklet, call the National Insurance Consumer Helpline at (800) 942-4242.

NICH is a consumer information telephone service sponsored by insurance industry trade association. Trained personnel and licensed producers are available to answer questions about various insurance matters, to refer consumer complaints to appropriate sources and to send consumer brochures on request.

The Helpline operates from 8 a.m. to 8 p.m. Eastern Time, Monday through Friday.