Accelerated Option: What It Is, How It Works

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Updated July 16, 2023

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What Is an Accelerated Option?

An accelerated option is a clause in an insurance contract that allows the policyholder to receive part 🍰of the cash benefit sooner than it would normally be paid.💯

Accelerate🤡d options, al❀so referred to as accelerated benefits, normally come in the form of a rider to a contract.

Key Takeaways

An accelerated option is an insurance contract provision that allows the policyholder to withdraw benefits early under some circumstances.
The option is most often used for end-of-life care when necessary.
The option can be added when the policy is first purchased or when a policy is already in effect.

Understanding Accelerated Options

An accelerated option clause can be added to various insurance contracts, including life insurance policies. Whole, universal, and other types of permanent life insurance come with the ⛎accelerated benefit option. Some term life, group life, and group term life providers also offer this option.🔥

These options can be added whꦫen the life 🔯insurance policy is first purchased or, in some cases, when a policy is already in effect.

The terms and conditions alm🅺ost always include a provision foꩵr benefits if the policyholder becomes terminally ill. Accelerated options can also be activated when long-term care is needed or when there is a medically incapacitating condition.

Tip

In many policies, the accelerated death benefit option usually allows the policyowner to receive the lesser of $250,000 or 50% of policy's face value.

Cost of the Option

The life insuran♍ce company will deduct the payment of the accelerated benefit from the death benefit it ultimately pays to the beneficiary.

An accelerated life option comes♎ at an additional cost to the policyhol🌊der. The cost is normally calculated as a percentage of the original premium for the policy.

Many insurance companies don't charge a separate premium for the accelerated life option unless the policyholder actually uses it. If the 澳洲幸运5开奖号码历史查询:insurance company pays out the benefit before the p♏olicyholder's death, it may reduce the payout and charge a small fee 𓆉for doing so.

Important

Accelerated life options come at an additional cost to the pol🐓icyholder.

Special Considerations

Insurance companies may have conditions regarding when a policyholder can re💮ceive an accelerated benefit. For example, the contract may state that an insured party must be at a certa🤡in point near death before taking advantage of the accelerated option.

In addition, the company m🔥ay put a limit on how much of the total benefit can be withdrawn. Early payments may ran𝔍ge from 25% to 100% of the total death benefit.

When a policyholder receives a partial benefit from an accelerated option, it decreases the final or death benefit of the policy by that same amount.

As noted above, accelerated options generally appear as a contract rider. A rider is a special provision that makes an amendment or adds a benefit to a policy. Riders typically provide policyholders with🉐 additional coverage to meet their needs.

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