3.9.10 Accelerated Death Benefits Provision
The accelerated death benefit provision allows the policyowner to withdraw funds from his/her life insurance policy early, before death. This concept differs from borrowing the cash value as this money does not have to be repaid. The provision in effect allows the insured policyowner to become his/her own beneficiary.
If the insured becomes terminally ill or suffers from a life-threatening medical condition (which must be proven), a portion of the policy's proceeds may be withdrawn, usually up to 75% of the face value. There is no charge for utilizing this provision; however, some companies may withdraw an interest charge for the money they would have earned if the funds had not been withdrawn. At the time of death, the beneficiary would receive the difference between the policy's benefit and the amount of funds already withdrawn.
