Questions about accelerated benefit option

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PostPosted: Mon Jun 01, 2009 10:39 pm   Post subject: Questions about accelerated benefit option  

Hello and thanks in advance for any input. I just found this forum and thought I'd put my situation and question out there for help.



Last Sept I had to stop working due to progression of breast cancer and now I'm stage IV (late stage). I "ported" my group life insurance and the first payment is due this month.



Can I request to take the accelerated death benefit anytime or is there a waiting period ?



What if I am given the benefit and say some time down the road I get better and want to try to work a couple of days a month (I'm a nurse and can work in a hospital pool as little as I want).....will they ask for the money back seeing I haven't died yet??



The fact is I'd like to use the money to fix up my house so when I pass away my son can just sell it and move on. Just planning ahead.



Pat

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PostPosted: Tue Jun 02, 2009 1:24 am   Post subject:   

Pat, that's not planning ahead. That's making decisions for somebody else. Taking an accelerated death benefit means that he is going to inherit less money.

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PostPosted: Tue Jun 02, 2009 3:17 am   Post subject:   

pa5762, welcome to the forum.



As far as the accelerated death benefit is concerned- you go ahead and use the funds for whatever you like, and no- you don't have to pay it back assuming you don't die. If you want to fix up the house, go for it. If you want to let your son worry about the house, that's fine too.



Just remember that any funds that you advance while you're still alive will be deducted from the proceeds upon your death. Insurance Expert is right when he says that your beneficiary will receive less than originally anticipated, but it doesn't have anything to do with "inheritance." The inheritance comes from your estate, not the life insurance policy. His idea was right on target, just missed on the idea of inheritance.



Frankly, the idea of the accelerated death benefit is to allow you do do whatever you want with the money if you meet the criteria required to advance the funds, and I think you you will qualify.



Do what you want. If this benefit is attached to your policy, which it sound as if it is, do what you want. By the way, smart move to convert your group life into an individual policy.



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PostPosted: Tue Jun 02, 2009 6:03 am   Post subject:   

The accelerated death benefit is added to the policy so that the insured can take advantage of the money before the payment of the death benefit when they are terminally ill or something and may be in need to some fund. But IMO it should be used wisely.



As Teacher has said you can practically use this money for whatever you want but at the same time it would reduce the amount that would be paid to your son after your death.



Now, Pat you need to decide whether you would like your son to receive less afterward or the amount that you have set aside for him would be sufficient for him to start over.



And, Pat you would be in my prayers.



~Jeremy

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PostPosted: Tue Jun 02, 2009 11:03 pm   Post subject:   

Thanks for the replys everyone but my son is grown up, has a career and if I took half of the amount (which is max allowed) it would leave plenty for my burial expenses and still more than enough for him. He would gain more if I fixed up the house beforehand, then when I'm gone sold it.



Actually, I always thought I was overinsured since it's just myself, no small children. Now I'm glad I never decreased the amount.

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PostPosted: Tue Jun 02, 2009 11:06 pm   Post subject:   

Jeremy, thanks for any prayers!

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PostPosted: Wed Jun 03, 2009 5:17 am   Post subject:   

Since there will be enough for your son even if you take a portion out from the policy, I'd say that's the way to go.



And Pat, we never are over insured since a life is priceless.



~Jeremy

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PostPosted: Wed Jun 03, 2009 5:37 am   Post subject:   

Hi Pat



You have it all planned ahead and your son will have no difficulty in the future. This concept of accelerated death benefit is a new one but has become quite popular in very short time.



You'll be in my prayers too Pat. Hope you recover.



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PostPosted: Wed Jun 03, 2009 5:49 am   Post subject:   

Do all insurance companies provide accelerated death benefits? Can I purchase one for my ailing mother?


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PostPosted: Wed Jun 03, 2009 5:50 am   Post subject:   

Quote:
Do all insurance companies provide accelerated death benefits?




Accelerated death benefits are offered by some insurance companies as part of the policy. Those companies who do not offer this as part of the policy, do so with additional built-in charges or may be offered as a rider. There will be additional charges for the same.


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PostPosted: Wed Jun 03, 2009 5:54 am   Post subject:   

I'd also like to mention that the benefits you receive from accelerated death benefits may be considered as income. If you have Medicaid, this might affect it adversely. If you are planning to buy a policy, make sure you have spoken to your agent about the effect it will have on Medicaid and then decide on buying.



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PostPosted: Wed Jun 03, 2009 6:35 pm   Post subject:   

Thank you for your kindness/prayers sil!



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PostPosted: Wed Jun 03, 2009 6:53 pm   Post subject:   

Quote:
Do all insurance companies provide accelerated death benefits? Can I purchase one for my ailing mother?




Just my 2 cents: The agent for my homeowners insurance said if I didn't already have a life insurance policy they could provide a small one of $15,000.00 for $172.00/month, no exam required, but I didn't need it. I never realized you could get small policys like this. Yes it's expensive but the way I see it if you know you may need to use it soon and can make the payment until then, then it beats not having funds to bury your loved one.



I've always had group medical and life coverage with work and now see why they say not to let it lapse.
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PostPosted: Wed Jun 03, 2009 6:58 pm   Post subject:   

I suppose it should only be taken if needed.



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PostPosted: Thu Jun 04, 2009 3:04 am   Post subject:   

To The OP and sil:



Quote:
I'd also like to mention that the benefits you receive from accelerated death benefits may be considered as income. If you have Medicaid, this might affect it adversely.




It is rare that accelerated death benefits are considered taxable income. It used to be the case, but the IRS changed the IRC a short while ago to make just about every accelerated death benefit tax free. It has to be from a life insurance policy, and you need to meet certain guidelines which are only that the insured is either terminally ill or meets one of the qualifying events as listed in the policy. See the following link for details:



http://www.wwwebtax.com/income/accellerated_death_benefits.htm



If you use the benefits for long term care and the benefits exceed the daily allowance of tax-free benefits, the insured is taxed on the excess. As well, don't confuse an accelerated death benefit with a viatical (or structured life) settlement contract.



As far as Medicaid is concerned, life insurance policies are only considered a "countable asset" if the life contract is a cash value policy. Term polices are exempt regardless of face amount as they have no value until the death of the insured, and the insured isn't going to be the one who gets the death benefit. Cash value policies, on the other hand, can absolutely effect Medicaid eligibility depending on how much cash value you have over the exempted amount (I think that's only $1500, although I could easily be wrong).



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