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What is an Accelerated Death Benefit Rider
Based on the survey, in India, more than 37% percent of residents suffer from at least one health condition. So, the need for an Accelerated death benefit rider becomes a necessity. Many of you must be unaware of this in-built optional cover.
Life insurance includes additional riders that allow policyholders to enhance their base cover and give extra protection against specific conditions. An accelerated death benefit rider allows you to claim a portion of your life cover early in case you are diagnosed with critical illness.
However, the list of qualifying critical diseases may vary from insurer to insurer. Let's understand more about accelerated death benefit riders.
Accelerated Death Benefit Rider Charges
Accelerated Death Benefit is an add-on feature available in certain life insurance policies. You can add this rider to your life insurance policy at just nominal charges of up to Rs. 300 or Rs. 500 monthly. If you take out a loan against your policy, your accelerated benefit will be paid minus the loan amount. So when insurers pay your dependents the life cover, they deduct the accelerated benefit you withdrew plus interest.
Who Qualifies for an Accelerated Death Benefit
To opt for an accelerated death benefit ride, you must submit some medical certification approved by a doctor or medical professional stating you've been diagnosed with a critical or terminal illness. However, the document must state that your life expectancy is fewer than 12 to 24 months.
You may still qualify for accelerated benefits if you're not terminally ill. Few insurance providers allow you to claim an accelerated benefit if you are diagnosed as critically ill, chronically ill, or need long-term care. But before making any decisions, have a word with your insurer to confirm your eligibility for this rider.
How Can I Add Accelerated Death Benefit Rider to Policy
Some insurers offer accelerated death benefit riders with a base plan of your life insurance policy. If not, you can contact your insurance provider and ask them to add this rider to your plan. Please note that you may have to provide some medical document stating that you've developed a qualifying serious condition or terminal illness before you can opt for this rider.
Advantage and Disadvantage of Accelerated Death Benefit Rider
Each add-on covers some inclusions and exclusions. So it's important to understand it briefly before buying it.
Inclusion
- You can claim some portion of your death benefit if you're diagnosed with a qualifying critical illness.
- You'll get a lump sum payment, which you can use to pay the hospital bills, alleviating your financial stress.
Exclusion
- Your insurance will state qualifying events that enable you to use the rider.
- Please note that some specific diseases qualify for it.
How Accelerated Benefit Riders Work
Accelerated benefit riders have become a basic necessity for those who have a higher chance of getting critical illness in the future.
Under certain conditions, policyholders can claim an accelerated benefit while they are alive. Policyholders can use lump-sum amounts to pay the medical bills of chronic or critical illness.
However, they are still entitled to any remaining cash value and death benefit. You also have the flexibility to choose the benefits payout - they can select either a lump sum or periodic payment.
Types of Accelerated Benefit Riders
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Critical Illness Riders
Critical illness is a life insurance rider that offers a large portion of the life cover to an insured person if they are diagnosed with a critical illness. You can add this optional in-built cover to the base plan in exchange for an additional premium. -
Chronic Illness Riders
Under chronic illness rider, you'll get a periodic cover if you are diagnosed with critical or chronic diseases for an extended period. This type of rider is typically triggered if the policyholders cannot perform daily tasks, such as working, walking, toileting, and dressing. -
Long-Term Care Riders
Long-Term Care Riders slightly change how life insurance works, allowing you to claim a life cover for long-term care while you're alive. You can use that lump-sum payment to pay hospital expenses and nursing home expenses. Some common diseases under this rider are Parkinson's disease, arthritis, stroke, and many more.
Conclusion
Accelerated death benefit rider, often referred to as living benefits rider. Under this rider, you can avail some portion of your life cover while you're still alive. However, you can add this rider to your basic plan in exchange for extra premiums. The lump sum money can be used for medical expenses throughout your treatment.
Accelerated Death Benefit Rider: FAQs
1. What Is the motive for adding Accelerated Death Benefit?
The main objective of accelerated death benefits is to help terminally ill individuals with access to a portion of their death benefit while they are still alive.
2. What are the disadvantage of accelerated death benefit?
The biggest disadvantage of accelerated death benefit riders is that some specific chronic or terminal diseases qualify for it.
3. What is an example of an accelerated death benefit?
Bhanu holds a 1 crore death benefit of life insurance policy with an accelerated death benefit rider. He can claim an accelerated benefit during their lifetime to pay for qualifying expenses.
4. What is the life expectancy for an accelerated death benefit?
The Accelerated Death Benefit Rider goes into effect if your document states that your life expectancy is fewer than 12 to 24 months.
5. Who is to accelerated benefit payable?
The accelerated benefit is a one-time, lump-sum payment payable to the insured person.
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Written By: Sahil Singh Kathait
A boy-in-squares bagging escapades of switching streets in groove & sensing musical airy-notes from 6 1". Under wayed nyctophile sketching the walls of life from the panorama of anime.
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