What Is an Accelerated Option?

An accelerated option is an attachment to a typical life insurance policy that allows for some or all of the benefits within the policy to be paid before the policy-holder's death. There usually must be some circumstance which triggers this clause, such as the person with the policy being diagnosed with a terminal illness. In that case, the person may receive some or all of the benefits accrued in the policy, with the remainder being paid to the person's chosen beneficiary upon his or her death. Another type of accelerated option in an insurance policy allows for the benefits accrued in the policy to be used to pay off the remaining premium due to the insurance company.

Most people think of life insurance policies as a way to provide for their loved ones after their deaths. There are certain insurance companies which may offer benefits that can be received by the policy-holder even before he or she dies. This can be useful if money is needed for care for those people with medical conditions that will likely lead to death. An accelerated option allows the policy-holder to get some or all of the benefits for those purposes.

In most cases, an accelerated option is contained in a rider, which is an addendum to an insurance policy. These options usually are purchased by a person making higher premium payments. They are also known as accelerated death benefits, essentially because they allow for those benefits to be paid before death actually occurs.

A person who has an accelerated option to his or her life insurance policy can take advantage of death benefits if certain qualifications are met. The usual trigger for the option is a serious illness that requires long-term care or even a terminal illness that leaves someone with a short time to live. People who have these options may take some or even all of the insurance benefits that have been accrued in the policy before they die. They must understand that doing so will leave fewer benefits for their beneficiaries.

There is one other type of accelerated option associated with insurance but unrelated to accelerated death benefits. In this type of option, the policy-holder has the choice of taking the money accrued in the policy before the term is complete. By doing this, they receive a lump sum. This amount is then used to pay off the remaining premiums owed on the policy to the insurance company.