What is Terminal Illness Rider?
A Terminal Illness Rider, also known as an Accelerated Death Benefit, is a feature available in many Term Life and Whole Life Insurance policies. This rider provides financial support to the policyholder if they are diagnosed with a terminal illness, typically with a prognosis of 12 to 24 months to live. The policyholder can access a portion of the policy’s death benefit early, which can be used for medical expenses, personal needs, or to maintain financial stability during a challenging time.
The amount accessible through the Terminal Illness Rider is usually a percentage of the death benefit, such as 75% to 90%, and is subtracted from the eventual payout to the beneficiaries after the policyholder’s death. For example, if a policyholder has a $500,000 life insurance policy and accesses $200,000 due to a terminal illness, the remaining $300,000 would be paid to beneficiaries upon the policyholder’s death.
This rider is valuable for individuals seeking peace of mind that they can access funds to manage end-of-life expenses or reduce financial stress for themselves and their families. It provides flexibility and financial relief without requiring a separate or standalone policy.
Adding a Terminal Illness Rider is typically inexpensive or included as a standard feature, making it a practical choice for many policyholders concerned about unforeseen health issues.
