LIFE INSURANCE RIDER
Terminal Illness Rider & Accelerated Death Benefit
Is an accelerated death benefit rider a good fit for me? An accelerated benefit rider allows you to:
- Add additional coverage to certain existing or new term life insurance plans from Fidelity Life, often at no additional cost.
- Access some of your death benefit in case of a terminal illness diagnosis.
What is a terminal illness rider (accelerated death benefit rider)?
An accelerated death benefit rider, also known as a terminal illness rider, is a supplemental life insurance product that gives you early access to your death benefit if you’re diagnosed with a terminal illness. If you’re given a short time to live, an accelerated benefit for terminal illness rider pays out a portion of your life insurance policy while you’re still living.
So, what does an accelerated death benefit rider mean for your family? These terminal illness benefits mean you have the financial freedom to put your affairs in order, travel, pay for end-of-life care, or cover anything else you need.
An accelerated benefit rider for terminal illness often comes with Fidelity Life policies at no extra cost. This rider goes into effect once a medical professional confirms your diagnosis and short life expectancy.
Who qualifies for an accelerated death benefit terminal illness rider?
An accelerated benefit, or terminal illness rider, is typically available for healthy adults between 18 and 85 years of age who qualify for a Fidelity Life finalexpensedirects Final Expense or the finalexpensedirects Guaranteed Issue policy. If you already have an illness which could be terminal in the near future, such as cancer or late stage kidney failure, you will usually not qualify for this rider.
Pros & cons of accelerated death benefit riders
Pros
- No cost to you. You can add an accelerated death benefit rider to Fidelity Life’s RAPIDecision® Final Expense or Guaranteed Issue plans with no additional premium increase, making it a no-risk way to gain extra protection.
- Access your death benefit early if needed. If you have a qualifying critical illness, you can tap into a portion of your life insurance payout early to cover any financial needs while you’re still alive.
- No spending restrictions. If you do access your payout early, you can spend the money on whatever you choose, like covering medical bills, paying off debt, hiring a caretaker, or even taking a special trip with your family.
Cons
- Reduces your total death benefit payout. If you decide to take out a portion of your death benefit payout while you’re living, the amount you withdraw will be subtracted from the lump sum payout that’s left to your beneficiary once you die. For example, if you have a $100,000 policy and take out $40,000, your beneficiaries will receive a $60,000 payout when you die. Make sure your loved ones know about any withdrawals to avoid financial surprises later.
- Only takes effect during a qualifying critical illness. While an accelerated benefit rider only pays out if you get sick, permanent life insurance plans typically come with a cash value component you can access for any reason during your lifetime. If you want to borrow funds from your policy in other situations, talk to a life insurance agent about how much cash value different policies provide.
- Only available when you buy your policy. You’re only able to add an accelerated benefit rider when you purchase your life insurance policy with Fidelity Life. If you think you might need it later, don’t put off adding this rider when you buy.
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Quick Answers to Common Questions
What Is a Life Insurance Rider?
How Does an Accelerated Benefit Rider Work?
If you are diagnosed with a terminal illness and expected to have a short life expectancy, an accelerated benefit (or terminal illness benefit rider) rider will allow you with withdraw a portion of your normal death benefit. You may withdraw up to the lesser of $100,000 or 50% of the death benefit. The rest of your death benefit remains payable to your chosen beneficiaries upon your death.
You can use this money however you see fit. If you survive longer than doctors expected, nothing changes – your life insurance still remains in effect. You will still pay your premiums, and your remaining death benefit will stay in effect. It’s best to consult with a tax professional to better understand any tax consequences of an accelerated death benefit.
When Can I Use an Accelerated Death Benefit Rider?
Can I Add an Accelerated Benefit Rider to an Existing Fidelity Life Policy?
No. An accelerated benefit rider must be provided when the policy is purchased, and cannot be added at a later date.
Can I Add an Accelerated Benefit Rider to an Existing Fidelity Life Policy?
If you receive a terminal diagnosis from a medical professional and have an accelerated benefit rider, you can use the money any way you see fit.
You may use it for medical care or to enhance your comfort while you’re ill. You can use it to work less or stop working so you can spend more time with your family. An accelerated death benefit can be used for travel. It can be distributed while you’re living to relatives, close friends, and chosen charities. You can even use it to pay off your mortgage or pre-pay your funeral expenses.
What Happens if I Am Diagnosed With a Terminal Illness and Then Die From Illness?
What Happens if I Am Diagnosed With a Terminal Illness but Then Live a More Extended Life Than Expected?
If you receive a terminal illness diagnosis and are given a short period to live, you can withdraw the set percentage of your life insurance policy death benefit per the terms of your accelerated benefit rider. If you then live longer than your initial life expectancy and continue to pay your premiums, your beneficiary receives the remaining death benefit when you pass.
For example, Betsy has a $200,000 life insurance policy with a terminal illness rider. She is diagnosed with end stage renal failure and given six months to live. She withdraws $80,000 (40%) of her death benefit, and distributes it personally to her relatives, closest friends, chosen charities, and pays off some debts. Betsy continues to pay her premiums, outlives her diagnosis, and dies 8 months later. Her beneficiary receives the remaining $120,000 (60%) of the death benefit.
Why Should I Choose Fidelity Life?
Fidelity Life is committed to helping you find the right life insurance. For more than 100 years, we’ve been helping everyday people like you get the life insurance you need and the peace of mind you deserve. Our mission is to work with you throughout your life. Whether just starting out, raising your children, or getting ready to enjoy retirement, we design products with families like yours in mind.
You can feel confident we’ll be there for your loved ones because we carry an A+ rating from the Better Business Bureau as well as an A- rating (Excellent) from A.M. Best Company, the oldest and most widely recognized provider of ratings for the insurance industry.
Our commitment to our customers, and their families, shows up in our innovative products and our top-notch customer service.
How Can I Get Started?
If you want to calculate your life insurance coverage needs, you can use our calculator. Then, we’ve made it simple to get your application started online.
