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Accelerated Death Benefit (ADB Rider) in Life Insurance
Neviya LaishramDec 22, 2025
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Definition: An accelerated death benefit is a provision in a life insurance policy that lets the policyholder receive part of the death benefit early if they are diagnosed with a terminal illness. In India, this benefit is usually offered as a built-in feature or rider, subject to insurer-specific terms and medical certification.
Contents
What is an Accelerated Death Benefit (ADB)?
When people think of life insurance, they often imagine a payout made after a loved one passes away. However, life doesn’t always go as planned. That’s where the accelerated death benefit comes into play. This benefit offers financial relief when it's needed most, during a health crisis.
Life insurance plans often have the ADB rider as an extra feature. An accelerated death benefit (ADB) allows life insurance policyholders to access a portion of their death benefit while they are still alive if diagnosed with a terminal illness and are given a limited life expectancy. This payout helps cover medical expenses, hospice care, or other personal needs during a difficult time.
Key Takeaways
Policyholders covered by ADB can withdraw a portion of their death benefit if they are diagnosed with a terminal illness (a condition or a disease that cannot be cured or adequately treated).
This rider is also known as ‘Terminal Illness Benefit’.
Taking accelerated death benefits will reduce the amount of money received by beneficiaries.
Accelerated death benefits are usually not considered taxable income.
Why are Accelerated Death Benefits Important?
Usually, you can receive the accelerated death benefit as a lump sum payment to ease your immediate expenses during your difficult time. This benefit is designed to provide some financial relief when you need it most. A number of people use the money for:
Hospital bills
Nursing home care
Hospice
Private caretaker services
Dependent care
Day-to-day expenses
How Accelerated Death Benefit Works in Life Insurance?
Accessing the Accelerated Death Benefit (ADB) can bring financial relief during a difficult time. In India, insurers usually require medical certification from a registered medical practitioner and documents as specified in the policy terms to approve an accelerated death benefit claim. Here's a step-by-step look at how it works within a life insurance policy:
Diagnosis: The diagnosis is a terminal illness or medical condition that is predicted to last no more than one year, according to the insurer.
Application: In order to make a claim, you or your representative sends the insurance company the necessary medical records.
Approval: The insurer checks the patient’s details and confirms if they are eligible according to the policy.
Payout: Once your policy is approved, a share of the death payment is made to you during your lifetime. You could pay the money upfront or in smaller payments.
Impact on Policy: The money received from ADB is deducted from the total benefit amount for the claim. The money that is left goes to your beneficiaries.
Continued Coverage: Your policy will still be in effect, but it will pay a lower benefit to your beneficiaries.
Example of Accelerated Death Benefits
Assume that Sarah, who is age 60, has ₹250,000 of life insurance coverage. Medical tests confirm she has a terminal illness, and she is only expected to live for another year. There is an accelerated death benefit included in her policy. Sarah’s claim for the benefit is granted, and she receives ₹100,000 at the start to deal with medical and care costs.
If she passes away, the beneficiaries will receive the last ₹150,000 of the policy amount. This will help Sarah as she nears the end of her life and also give her family some help afterwards.
Accelerated Death Benefits vs. Critical Illness Rider
Aspect | Accelerated Death Benefits | Critical Illness Rider |
|---|---|---|
Definition | Early access to part of the death benefit due to terminal illness | Additional coverage that pays a lump sum on diagnosis of specified critical illnesses |
Ownership | Policyholder retains ownership | An optional add-on (rider) attached to the life insurance policy, owned by the policyholder |
Payout Source | Paid by the insurance company | A separate lump sum payout funded by the rider coverage |
Benefit to Heirs | The remaining death benefit goes to beneficiaries | Usually does not reduce the death benefit payable to heirs |
Payout Amount | Portion of the death benefit (up to 50%) | Fixed lump sum amount specified in the rider, often pre-agreed |
Medical Requirement | Requires a terminal or chronic illness diagnosis | Diagnosis of any covered critical illness, regardless of prognosis |
Policy Status | Policy remains active with reduced value | Policy remains in force, with rider coverage active until payout or expiry
|
Summary
The Accelerated Death Benefit is a valuable feature within a life insurance policy that provides significant financial relief at one of life's most challenging times. By providing an early payout on a terminal illness, accelerated death benefits help policyholders to retain their dignity, make payments, and reduce the stress on family and friends. Though the policy's benefit will ultimately be reduced, the comfort provided in the moment can have tremendous value.
FAQs
Below are some of the frequently asked questions on Accelerated Death Benefit in Life Insurance
1. What is accelerated death benefit in life insurance?
Accelerated death benefit in life insurance allows policyholders to receive a portion of the death benefit early if they are diagnosed with a terminal illness, helping cover medical and personal expenses.
2. How does an accelerated death benefit work?
Accelerated benefits allow you to access a portion of your life insurance funds early. They’re designed to provide financial support during tough times, helping you cover urgent expenses and reduce stress when it matters most.
3. What is the life expectancy for accelerated death benefit?
The Accelerated Death Benefit Rider pays out a one-time lump sum payment of a portion of the death benefit if the insured person is diagnosed with a terminal illness with a life expectancy of 12 months or less.
4. What are the disadvantages of accelerated death benefit?
The main disadvantages of accelerated death benefits are reduced death benefits for heirs since the amount paid early is deducted from the final payout. Additionally, accessing these funds may affect policy values and could have tax implications. It might also reduce the overall financial security intended for beneficiaries.
5. What triggers the payment of accelerated death benefits?
In India, the Accelerated Death Benefit Rider (ADBR) allows early access to a portion of the death benefit if the policyholder is diagnosed with a terminal illness. Eligibility is typically based on a medical prognosis indicating a life expectancy of 12 months or less, as certified by a physician, subject to policy terms.
6. Does accelerated death benefit reduce the final payout?
Yes, taking an accelerated death benefit reduces the final death benefit payable to beneficiaries. The amount paid early is deducted from the total sum assured, along with any applicable charges, depending on policy terms.
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