A Guide for People with Terminal Illnesses

If you have a terminal illness and are going to die - or if you are caring for someone who is - you may be thinking about time and money. 

You may also be thinking about life insurance. 

If you have heard the words "accelerated benefits" and "viatical settlements" this pamphlet can help you better understand your options.

What are accelerated benefits?

Accelerated benefits are also called "living benefits." 

These benefits are money that you get from a life insurance policy. If your benefits are accelerated this means that you get some or all of the money from your life insurance policy before you die.

Sometimes, this type of benefit is included in a policy when it is sold.  Sometimes you have to pay extra for it. 

What is a viatical settlement?

When you take a viatical settlement you sell your life insurance policy to a viatical settlement company.  In return the company gives you a lump sum of cash.

A viatical settlement works this way:

• First, you assign your life insurance policy to the company;
• Second, you get a percentage (portion) of the value of the policy; 
• Third, the company becomes  beneficiary (the person who takes policy money on your death);
• Fourth, company pays your policy premiums;
• Fifth, when you die, the company collects the face value of the policy.

Ask people you trust for help choosing

• Life insurance affects your child, your friends and people who are helping to take care of you. 
• Before making changes to your policy, talk to friends and family. 
• Talk to a lawyer, an accountant or a financial planner to make sure your choice will work the way you want it to.

You have choices

You have choices.

• If you need money right away, you might think about asking for a loan from someone.  A private loan is often less expensive than taking a viatical settlement.
• The person who will collect under your life insurance policy may be willing to loan you money. 
• Or, you might sell your life insurance policy through a viatical settlement. 
• Another choice is to opt for an accelerated benefits plan.

What is an accelerated benefits plan?

Many life insurance policies include this kind of plan.

Under this type of plan you can collect from 25 to 100 per cent of your death benefit as early payment.  Be aware that 

• Early benefits are only paid under certain conditions. 
• Amounts and methods of payment vary greatly.

To find out how your policy works, ask your insurer.

Who to ask?

If you own a life insurance policy, you can call your State Insurance Commissioner or your company for answers to your questions.  Ask if your policy allows for accelerated benefits or loans.  Ask if there are any fees for these things.

Be aware that

• Some insurers offer accelerated benefits for an added fee. 
• Other insurers only charge if use your accelerated benefits.
• In most cases, the value of the policy is reduced by benefits paid early.
• There may be a service charge.