An Accelerated Death Benefit (ADB) is a feature in some life insurance policies that allows you to receive part of your life insurance payout before you die. This can be especially helpful if you're diagnosed with a terminal illness or need money for long-term care. Instead of waiting for the full payout after you pass away, you can access funds earlier to cover medical expenses, care costs, or other needs.
When you have an ADB rider on your life insurance policy, you can apply to receive a portion of your death benefit while you're still alive. The amount you can receive usually depends on your policy's terms and your health condition. This money can then be used for various expenses, such as medical bills, home modifications, or long-term care services.
Long-term care refers to the services and support you might need if you have a chronic illness, disability, or other condition that requires ongoing help with daily activities. These services can be expensive and are not always covered by health insurance. An ADB can provide the financial support needed to pay for long-term care.
Imagine you're diagnosed with a serious illness that limits your ability to care for yourself. You want to stay at home but need assistance with daily tasks like bathing, dressing, and cooking. An ADB can help you afford in-home care services.
For instance, if you have a life insurance policy with a $100,000 death benefit, you might be able to access $50,000 of that benefit early. You can use this money to hire a caregiver, make home modifications, or cover other care-related costs.
Suppose you need to move into a nursing home due to a debilitating condition. Nursing homes can be very expensive, with costs ranging from $6,000 to $10,000 per month or more. If your life insurance policy includes an ADB rider, you could use part of your death benefit to pay for these expenses.
For example, if you have a $200,000 policy, you might access $100,000 to cover several months of nursing home care, easing the financial burden on you and your family.