Accelerated Death Benefits is a provision of a life insurance policy (whole life, universal life or variable life or any combination of these) that helps in giving you money to pay for long-term care needs. Accelarated death benefit riders give the policyholder the ability to access the policy’s death benefit during his or her lifetime to help pay for assisted living, at-home care, or nursing home care.

One of the advantages of this type of rider on your life insurance policy is that you have money to help with long term care but if you don’t ever use that long term care benefit the policy is still useful to you. You still have the death benefit to help your family when you die. If you buy a long-term care insurance policy but don’t need it all the money you paid in premiums is wasted. Ofcourse it is not really wasted since you would have the insurance protection and not have to worry about the rising cost of long term care.

Any amount of money you take out of the policy during your life will reduce the amount of the death benefit available when you die. Still though many people like this arrangement because they believe they are covering their potential need for long-term care while also providing money for their family.

You can also use this policy as a source of extra money during your lifetime. You can actually borrow money from your policy and if you don’t pay it back, the amount is simply deducted from the amount of your death benefit.

A common life insurance policy with a long-term care rider will have a universal life or variable universal life insurance policy as a base, with an accelerated death benefit rider that lets you take 2% of the death benefit per month. Some policies will say that you can not reduce the death benefit below a certain amount. Some policies also include an additional provision that will extend the long-term care benefits after the policy limits have been met.

To give you an idea of cost lets use the example of a 300,000 universal life insurance policy for a 65-year old woman. The annual premium would be $6,447 without a long term care provision. With a long-term care rider, the cost increases by only $302.

Related posts:

1. Type of Life Insurance Policies What are the Different Types of Life Insurance

   There are...

2. Alternatives to Long Term Care Insurance Life Insurance for Long Term Care

   Most people who want...

Related posts brought to you by Yet Another Related Posts Plugin.

There are only basically two types of life insurance – term life and whole life insurance. Term life is just life insurance. If you die your surviving family members will have money to pay off debts and mortgages. Whole life functions as an investment (an asset that increases in value) and life insurance. A whole life policy is something that after a period of time will actually have some monetary value and will be something you can borrow against or cash out.

The other terms that you hear about are basically variations on the term or whole life policy. Listed below are some of the more common variations of term life and whole life. New types of term life and whole life are constantly being invented so whatever you purchase make sure you understand what you are getting.

Term Policy Life Insurance

Term Policies provide life insurance for a certain length of time. These policies provide benefits in the event of death, but they never have a cash value. As you age term insurance becomes more expensive because the likelihood the insurance company will have to pay off get bigger.

Whole Life or Cash Value Life Insurance

Cash Value or permanent insurance pays a death benefit whenever you die. There are three major types of whole life or permanent life insurance – traditional whole life, universal life, and variable universal life, and within each of these three categories they are more variations.

Whole Life Insurance

Whole Life Insurance – has guaranteed premiums (the amount of money you have to pay each month) and death benefits, and a minimum interest rate on your accumulated monies. In other words, you pay your premiums every month and part of the premium goes into something like a savings account and you earn a minimum of 3% on the money in that account. No matter what the current interest rate is you get that 3%.

Universal Life Insurance

Universal Life Insurance lets you change some of the features of your policy if you want. For instance you can increase the death benefit if you pass a medical examination. The savings part (called a cash value account) usually earns a money market rate of interest. The money market rate is a bit higher than the just a plain savings account rate.

Variable Life Insurance

Variable Life Insurance – the only thing different about variable life as compared to universal life is how the savings account works. With variable life insurance you choose what kinds of investments your money goes into. Instead of just a plain money market account you can choose from a variety of mutual funds or buy stocks and bonds.

Related posts:

1. More Alternatives to Long Term Care Insurance Accelerated Death Benefits

   Accelerated Death Benefits is a provision of...

Related posts brought to you by Yet Another Related Posts Plugin.