Accelerated Death Benefits are a policy option that allows you to access a percentage of your death benefit while still alive. It’s triggered in the event of the insured having a limited mortality, generally less than a year. In that event, the company will provide a predetermined percentage of the insured death benefit, as a loan. When the insured does pass, the loan is repaid out of the death benefit.
ADB is generally not contractual – it’s not specified in the policy. Instead it’s something that the insurance company provides as a matter of course, and is determined on an individual basis. The insured will need to provide medical evidence of their limited life expectancy, and the company decides each loan on a case by case basis.
ADB is not available on all term policies, but when it is offered it is done so at no additional charge – there’s no cost for this benefit.
Our term life insurance quotes here at lifecover.ca show you which policies include this benefit and those that don’t. When comparing premiums, you should also compare whether or not a policy has this benefit. Life the life insurance coverage itself, it’s something that you don’t expect to ever need, but if you do need it, it can become very important.
Because ADB is provided as a loan, there’s no tax consequences should the benefit be paid out.
Further, there’s no restrictions on how you can use the money obtained from this benefit. You can use it for medical treatment, for providing end of life care, or whoever else suits you best.
Note that this benefit is not a substitute for a critical illness policy. With critical illness insurance, you would be expected to survive the illness. With ADB, the expectation is that you won’t (because one of the conditions is that your life expectation is less than a year).