In response to a less than reputable business practice, life insurance companies now offer at no additional charge a feature called an accelerated death benefit.
It wasn’t that long ago that there was a prolific market in praying on the terminally ill and especially those whose families were suffering not only the loss of a loved one, but a financial disaster with loss of income and medical bills. Along would come these less than reputable business people (we’ll call them pigs), who would be willing to pay you half of the value of your life insurance policy in exchange for ownership of the policy. A lot of people went for that usually because the terminally ill insured person didn’t want to see the family suffer financially. So, the pig would bail them out and take over ownership of the policy and keep it in force until the insured’s death, netting a 100% profit when they received the full death benefit.
Now, whether you have term insurance, whole life or universal life, the insurance companies have put the pig out of business. If you are terminally ill and have an accelerated death benefit rider, you are allowed to take a portion of your death benefit from the company (usually 50% or more) to use before your death. Consult your independent life insurance agent to make sure your policy has the rider. With the rider the policy remains under your ownership and upon your death the unused balance goes to your beneficiaries.
This post is somewhat dated. Life insurance underwriting is changing and evolving continually. For more updated information check out some of the key word links. If you have a specific question or topic you need information for do a search. If you don’t find the answers you need contact me and we’ll make sure you get the information that is important to you.