What is Acceleration Life Insurance?
Acceleration Life Insurance is an insurance policy or plan that allows the holder of the policy to receive a percentage of the amount of the policy before their death. Usually, it is a potion of death benefits received by a holder before their death. Typically, a policy holder can receive between 25%-50% of the total amount in the policy before their death, this percentage can also be 100% depending on the severity of the condition. However, it is important to know that accelerated life insurance does not just occur, it is used in cases of serious injuries, long-term illnesses and medical emergencies that the policy holder faces. Acceleration Life Insurance is also called accelerated death benefit.
How Does Life Insurance Acceleration Work?
Accelerated Life Insurance started in the 1980s when AIDs was quite rampant, it was introduced to relieve AIDs patients from economic pressures that they face. Policyholders who need an organ transplant or have illnesses that can terminate their lives within two years can access this provision. Policyholders that suffer from serious illnesses and intractable diseases have the right to accelerated life insurance or accelerated death benefits. It is a percentage of death benefits received by the policyholder to cater for medical bills in cases on emergencies of long-term health care bills. 25% to 100% of compensation can be received by a policyholder before their death, accelerated benefits are tax-exempt.
Example of an Acceleration of Life Insurance
The illustration below is important for a better understanding of how an accelerated life insurance works; If an individual has a life insurance worth $1,000,000 and the individual was diagnosed with a terminal illness, an intractable disease or a medical condition that can terminate his life within a short while, the policyholder can opt for an acceleration of life insurance. Once this claim is submitted, the policyholder can get 25% – 50% of the original amount of the policy which is $1,000,000. If 50% is given as the accelerated death benefit, that will be $500,000, then the new face value of the policy will be $500,000.
