Learn the differences between accelerated, level, and limited death benefits

Life insurance helps financially take care of your family and loved ones in the event of your death. Understanding the different types of life insurance and the death benefits they offer can help you choose which insurance plan is best for you.
 
A death benefit is the amount of money that will be paid upon the death of the insured, but it can be paid out in different ways. Here we explain accelerated death benefits, level death benefits, and limited death benefits.

What is an accelerated death benefit?

Also known as a living benefit or terminal illness benefit, an accelerated death benefit (ADB) allows you to receive a cash advance on your death benefit while you’re still alive. The money you receive from ADBs can be used for medical or living expenses or to help relieve your loved ones of financial burdens, such as paying off debt during your final years.
 
Accelerated death benefits give you a little bit of added security, knowing that if you have expenses prior to death, you can access some of your death benefits to pay for them.
 
Typically, you can become eligible for accelerated death benefits if you meet any of the following criteria:

• You’ve been diagnosed with a terminal illness and are expected to die within two years.
• Your life expectancy has been reduced, typically due to a critical illness, such as cancer, a heart attack, stroke, kidney failure, paralysis, coma, or amyotrophic lateral sclerosis (ALS or Lou Gehrig’s disease).
• You have a chronic illness that requires assistance with activities of daily living, which include bathing, eating, getting dressed, toileting, and transferring.
• You need an organ transplant because of an illness.
• You are confined to hospice care or a nursing home facility.

Accelerated death benefits can be paid in a lump sum or in installments. The form of payment you receive matters, because receiving death benefits could impact your tax liability, affect your eligibility for Medicaid, or have other implications for you or your beneficiaries — the people you choose to receive your death benefits after you die.
 
Accelerated death benefits aren’t borrowed or loaned. Instead, the amount of money you receive is deducted from your death benefit, which reduces the amount of financial support your loved ones will have to cover your funeral or other expenses after you die.

What is a level death benefit?

Life insurance companies offer level death benefits that pay the same amount to your beneficiaries after your death, regardless of when you purchased the life insurance policy. The premiums for level death benefits are typically cheaper than life insurance policies with increasing — or graded — death benefits. If you’re over the age of 60, when premiums for life insurance policies typically increase, the lower premiums for a life insurance policy with level death benefits may make sense for you.
 
To qualify for level death benefits, you generally have to show you’re in good health by answering a few health questions and survive the first two policy years. If you don’t qualify for level death benefits with first-day coverage, you can still be issued you a life insurance policy, but it may have a limited death benefit.

What is a limited death benefit?

Limited death benefits restrict the amount of life insurance coverage you have for a certain period of time. If you’re not healthy, you can typically still purchase a life insurance policy with a limited death benefit, and if you survive a predetermined number of years, you may qualify for full coverage.

Which death benefit is best for you and your loved ones?

A lot of factors should be taken into consideration to determine what is best for you and the beneficiaries who will receive your death benefits. An American Republic Insurance Services agent will look at your situation to help find the best product that provides the death benefit you want at a price you can afford.