In the event that the policy holder is diagnosed as terminally ill, if they have an accelerated death benefit provision on their policy, they will be allowed to take an advanced payment of a portion of a life insurance policy's death benefit to pay for medical expenses or long-term care. Requirements vary from company to company. Some riders add extra cost to your monthly life insurance premium, however, an accelerated death benefit rider is usually included on most term life insurance policies at no additional cost. These riders are usually a part of only term life insurance polices, since they have no cash value. A permanent life insurance policy accrues cash value, and therefore a loan may be taken against the policy to cover the kinds of expenses that would need to be covered by an Accelerated Death Benefit rider.

Accelerated benefits are part of so-called “living benefits” to life insurance polices. Accelerated death benefits are similar to, but not the same as a viatical settlement. A viatical settlement allows you to “sell” a portion of your life insurance to a third party individual or company for immediate cash. Upon your death that person or entity is paid back from the death benefit.