The insurance industry is evolving to offer more perceived value to clients and boost their bottom line. Accelerated benefits are one of the more recent innovations.
Look at your current life insurance policy as essentially a Buy and Die proposition. Accelerated riders allow a client to tap into the face amount of their policy when certain disabling conditions are met. A good example would be is a client were to be diagnosed with a terminal illness, an accelerated rider specifically mentioning Terminal illness would pay between 70 to 90 per cent of the death benefit of the policy.
This gives the client a significant portion of their death benefit while they are living to seek alternative treatment or to use for any purpose. A better deal than the heirs getting the death benefit after the client passes.
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Is the insurance company doing this out of the goodness of their heart? Hardly, they are just practicing good business. By paying out less than the full death benefit they save a lot of money that can then be reinvested for them. Does it help the client? Absolutely! Terminal illnesses usually mean the loss of income-generating activity while financial obligations remain the same. Accelerated benefits help to alleviate the resulting loss of income. So this is a win-win for the company and client.
