Accelerated Death Benefits

Education: Here's a bit of news to add to your educational know-how on life insurance:

Accelerated-death benefits are common in life insurance, allowing the terminally ill to cash in coverage.

Insurers sometimes reject claims due to policy restrictions, capped life expectancy, or disputes over medical assessments.

Policyholders may be unaware of their right to claim benefits, leading to potential lawsuits and confidential settlements.

Having an accelerated-death benefit is one thing. Getting a payout can be altogether tougher. Terminally ill people face a minefield of policy restrictions. The fate of six-figure lump sum payments often rests on emotionally fraught judgments on how sick the policyholder really is, lawyers and consumer advocates said.

Medical advances are making it harder for doctors to hand out such death sentences with the certainty insurers require, as targeted drugs and immunotherapies transform the outlook for many types of cancer.

Claims are rejected for medical conditions that occur too soon after a policy was bought, are insufficiently documented, are deemed curable or—most commonly—are projected to be unlikely to result in death within the policy’s specified time limit, according to plaintiff lawyers.

“I’ve seen firsthand how commonly insurers weaponize the fine print,” said one attorney.

Insurers cap the life expectancy at which an accelerated-death benefit is payable, something which is required by state regulations. The limit ranges from six months to two years, depending on the policy.

Moral to this story? Read the fine print in an insurance policy you are being sold or are considering, and check with your state's insurance authority on complains or minefields.