Acceleration of Benefits

In recent years, many insurance companies have included in their policies a provision that permits the accelerated payment of benefits to a policyholder who suffers from life-threatening medical conditions (such as cancer, heart or kidney failure, or AIDS) that will likely lead to his or her death within a specified time period, such as 12 months.

If such an option is exercised, amounts paid during the insured's lifetime are treated similarly to a policy loan; interest accrues on the amount advanced, and the policyholder still owns the policy and must continue to pay premiums.

Because the amount advanced comes from the "pure" term portion of the policy, both term and cash value policies may be written with an accelerated death benefit provision.