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Accelerated Benefits Definition
Accelerated benefits are terms of specific life insurance policies that permit a policyholder to get benefits before they die. Typically, accelerated benefits are given for people with medical disabilities, for those who need a permanent residence in a retirement home, and for short-term and expensive illnesses. The amount of cash that a person can deduct has been changed by several insurance companies, and the insured person must be near death to collect these benefits. Insurance companies offer death insurance of 25 to 100 percent as an advance payment.
A Little More on What are Accelerated Benefits
The selection of an accelerated benefits insurance policy grants a daily payment to give comfort to the insured person so he or she can tend to the family after death. It was first introduced in the late 1980s as welfare to relieve financial pressure on people with AIDS.
It’s not stated in the contract, but some policies may offer immediate benefits. If a person has an incurable disease and is expected to die within two years, he or she has a right to an accelerated benefit. If a person needs an organ transplant for his or her condition or he or she is receiving long-term hospice care, the person will be diagnosed with a sickness that can shorten his or her lifespan. If a person needs help to complete daily tasks, such as bathing, he or she can get even more impact. The wages can be different depending on the contract with insurance companies. The fee is added to the policy if the coverage is already included. If not, the person will need to pay a specific fee for death insurance.
The individuals who need to die within two years are typically not taxed for immediate wages. Having this benefit does not discontinue or replace long-term care insurance. Expenses not covered by long-term care insurance need to be supplemented. The accelerated death benefit can impact Medicaid and SSI qualifications.
References for Accelerated Benefits
Academic Research on Accelerated Benefits
The Accelerated Benefits Demonstration and Evaluation Project: Impacts on Health and Employment at Twelve Months Volume 1, Michalopoulos, C., Wittenburg, D., Israel, D., Schore, J., Warren, A., Zutshi, A., … & Schwartz, L. (2011). This demonstration proved the effects of having early access to health care coverage and associated services for new SSDI or Social Security Disability Insurance recipients. Following a year, health care use increased in the program. There were also fewer reported medical needs that were not met and health and functioning modestly improved. Search activities and job prep increased as well, but employment levels did not rise.
System and method for administration of life insurance policy with accelerated benefits, Roscoe, M. J., Fischer, P. M., Hilario, S., & Roche, S. A. (2014). U.S. Patent No. 8,666,857. Washington, DC: U.S. Patent and Trademark Office. There is a configuration for a computer system administering a life insurance policy to be responsive to confirmation certifying that the insured has a cognitive impairment or loss of ability to do two daily living activities, provide an outline of how to pay the policy owner an accelerated benefit in periodic payments, with the amount is less than the benefit for death, the initial periodic payment is made for a period beginning on the date of certification is received and lasting until the policy owner ceases to have cognitive impairment or the loss of ability to carry out two daily living activities. The system is also configured for determining how much to reduce the death benefit by the amount of each periodic payment.
Expanding access to health care for Social Security Disability Insurance beneficiaries: early findings from the accelerated benefits demonstration, Weathers, R. R. (2010). Soc. Sec. Bull., 70, 25. Most recipients of Social Security Disability Insurance (DI) must wait five months before receiving cash benefits and also wait 24 months before Medicare benefits kick in. The demonstration of accelerated benefits (AB) is an experiment created to prove the effects of giving new DI recipients who have no health insurance a generous package of health benefits while they wait the 24 months for Medicare. This article provides early findings on the predominance of health insurance with new recipients of DI and the characteristics of those without coverage. It also investigates the effects of AB on the use of health care, showing how AB minimizes unmet medical needs.
Life insurance, imminent death and accelerated benefits, Huntley, K. C., Poe, S. L., & Thornton, J. H. (1994). Journal of Financial Service Professionals, 48(3), 84. This article focuses on certain provisions of 19 specimen policies and riders giving accelerated benefits for imminent death after exploring legal environments encircling life insurance accelerated death benefits. The provisions addressed in this article include benefit limits, kinds of policies permitting the benefit, the causes for eligibility and the effect of current policy loans on benefit availability. Also discussed are the effects of option application on subsequent admittance to cash value, premiums, face amounts, and loan values. The variations found in many provisions are considerable. Basic relative tax questions impacting the terminally-ill life insured are also addressed.
The benefits of a secondary market for life insurance policies, Doherty, N. A., & Singer, H. J. (2003).Real Property, Probate and Trust Journal, 449-478. This article explores the benefits that accumulate to policyholders and obligatory insurers from an effective secondary market for life insurance contracts. First, the article analyzes the benefits of secondary markets in the mortgage and disaster insurance industries as comparison points. Next, it details the financial theory of a life insurance market before and after the establishment of the secondary market.
Death and Taxes: The Taxation of Accelerated Death Benefits for the Terminally Ill, Gazur, W. M. (1991). Va. Tax Rev., 11, 263. The author discusses traditional lifetime insurance payment options and then goes into accelerated benefits terms. The author addresses the terminal illness and nursing home option and benefit adjustments relative to operation. Then the author discusses the same options relative to taxation and brings up unanswered taxation questions.
Accelerated benefit insurance product management and distribution system and method, Roche, S., Roscoe, M., Leblanc, D. M., Cramer, C. B., & Proch, L. M. (2011). U.S. Patent No. 7,958,035. Washington, DC: U.S. Patent and Trademark Office. The authors present a new insurance product that gives an accelerated death benefit to the policyholder. It has a lifeaccess accelerated benefit that if the insured becomes terminally or chronically ill, the individual could file a claim and get benefits.
Viatical Settlement and Accelerated Death Benefit Law: Helping Terminal, But Not Chronically Ill Patients, Eremia, A. D. (1996). DePaul J. Health Care L., 1, 773. When a person gets seriously ill, money is often drained and the sick individual or families of the sick use up all their financial resources, hastily sell investments or dig into retirement funds. Not even those with health insurance are able to pay all the medical costs. The Health Insurance Portability and Accountability Act of 1996 was amended to relieve the financial responsibilities of those who are chronically or terminally ill.
Providing Health Benefits and WorkRelated Services to Social Security Disability Insurance Beneficiaries SixMonth Results from the Accelerated Benefits …, Wittenburg, D., Warren, A., Peikes, D., & Freedman, S. (2010). Mathematica Policy Research. This is the second brief to analyze the impact of accelerated benefits demonstration, which gives access to health coverage and other related services to uninsured recipients sooner.
The accelerated benefits demonstration: Impacts on the employment of disability insurance beneficiaries, Bailey, M. S., Weathers, I. I., & Robert, R. (2014). American Economic Review, 104(5), 336-41. The authors take information from the accelerated benefits demonstration to assess the impacts of providing new recipients of disability insurance with health coverage and other services while they are waiting on Medicare for 24 months. Health insurance did not boost employment, but there were some short-term influences on the labor market from the extra employment services. After random assignment, in the second calendar year, the authors show a statistically significant rise in earnings and employment. The result has suggestions for disability reform proposals and changes within the Affordable Care Act.