What is an accelerated death benefit rider on a life insurance policy?

An accelerated death benefit (ADB) rider allows the insured to receive a portion of their life insurance death benefit while still alive, upon diagnosis of a terminal illness, chronic illness, or in some cases a critical illness. The accessed benefit reduces the remaining death benefit paid to beneficiaries at death.

Terminal illness ADB: triggers when a physician certifies that the insured has a terminal condition with a life expectancy of 12–24 months (exact threshold varies by policy). Most policies allow accessing 25–75% of the death benefit, with the balance paid to beneficiaries at death.

Chronic illness ADB: triggers based on inability to perform Activities of Daily Living or cognitive impairment, similar to long-term care insurance. This is functionally similar to a long-term care rider.

The ADB proceeds are typically received income-tax-free under IRS guidelines for terminal illness acceleration, though tax treatment can vary — consult a tax advisor for your specific situation.

Many modern life insurance policies include a basic terminal illness ADB rider at no additional charge — it is worth confirming that your existing policy includes this provision. More robust ADB provisions (covering chronic or critical illness) may require an additional premium rider.

Nevada residents should review their existing policies for ADB provisions. Agents in our network can explain the ADB terms in policies from A-rated (A.M. Best) carriers.