What is an Accelerated Death Benefit Rider?
Based on surveys, over 37% of residents in India suffer from at least one health condition. This highlights the growing necessity for an Accelerated Death Benefit Rider, an optional, in-built cover that many policyholders may be unaware of.
Life insurance policies often include additional riders that allow policyholders to enhance their base coverage and provide extra protection against specific conditions. An Accelerated Death Benefit Rider enables you to claim a portion of your life cover early if you are diagnosed with a critical or terminal 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
The 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 nominal charges, typically ranging from Rs. 300 to Rs. 500 monthly. If you take out a loan against your policy, your accelerated benefit will be paid minus the loan amount. When insurers pay your dependents the life cover, they will deduct the accelerated benefit you withdrew, plus interest.
Who Qualifies for an Accelerated Death Benefit?
To opt for an Accelerated Death Benefit Rider, you must submit medical certification approved by a doctor or medical professional stating you have been diagnosed with a critical or terminal illness, and that your life expectancy is fewer than 12 to 24 months.
You may still qualify for accelerated benefits even if you are not terminally ill. Some insurance providers allow you to claim an accelerated benefit if you are diagnosed as critically ill, chronically ill, or require long-term care. Before making any decisions, it's advisable to confirm your eligibility for this rider with your insurer.
How Can I Add an Accelerated Death Benefit Rider to My Policy?
Some insurers offer Accelerated Death Benefit Riders as part of the base plan of your life insurance policy. If not, you can contact your insurance provider and request to add this rider to your plan. Please note that you may have to provide medical documentation stating that you have developed a qualifying serious condition or terminal illness before opting for this rider.
Advantages and Disadvantages of an Accelerated Death Benefit Rider
Each add-on comes with specific inclusions and exclusions. Therefore, it's important to understand them thoroughly before purchasing.
Inclusions
- You can claim a portion of your death benefit if you are diagnosed with a qualifying critical illness.
- You will receive a lump sum payment, which can be used to cover hospital bills, thereby alleviating financial stress.
Exclusions
- Your policy will specify the qualifying events that enable you to use this rider.
- Note that only specific diseases qualify for this benefit.
How Accelerated Benefit Riders Work
Accelerated Benefit Riders have become increasingly important for individuals who face a higher risk of developing critical illnesses in the future.
Under certain conditions, policyholders can claim an accelerated benefit while they are still alive. Policyholders can use these lump-sum amounts to cover medical bills for chronic or critical illnesses.
They are also entitled to any remaining cash value and death benefit. Policyholders also have the flexibility to choose the benefit payout method – either a lump sum or periodic payments.
Types of Accelerated Benefit Riders
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Critical Illness Riders
A Critical Illness Rider is a life insurance rider that offers a significant portion of the life cover to an insured person upon diagnosis of a critical illness. This optional, in-built cover can be added to the base plan in exchange for an additional premium.
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Chronic Illness Riders
Under a Chronic Illness Rider, you will receive periodic coverage if you are diagnosed with critical or chronic diseases for an extended period. This type of rider is typically triggered if policyholders cannot perform a certain number of daily tasks like bathing, dressing, eating, toileting, and transferring.
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Long-Term Care Riders
Long-Term Care Riders modify how life insurance works, allowing you to claim a portion of your life cover for long-term care while you are alive. This lump-sum payment can be used to cover hospital and nursing home expenses. Common conditions covered under this rider include Parkinson’s disease, arthritis, and stroke.
Conclusion
The Accelerated Death Benefit Rider, often referred to as a living benefits rider, allows you to avail a portion of your life cover while you are still alive. This rider can be added to your basic plan in exchange for extra premiums. The lump sum amount can be utilized for medical expenses throughout your treatment.
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