What is an ABR with Life Insurance and Should I Have it?
An “ABR” is an Accelerated Benefit Rider attached to your life insurance policy. It can also be called a Living Needs Benefit rider. An ABR is used if the insured were to be deemed terminally ill. In this case, you can request to receive a portion of your life insurance death benefit in advance.
How do life insurance carriers define a terminal illness? A terminal illness can best be defined as a medical condition that has no cure and has a fatal prognosis that will result in death within 12 months.
You may ask - is there a premium fee for this rider, and what percentage of the death benefit can I receive in advance? The good news is an ABR comes at no additional premium charge. However, the life insurance carrier generally charges a one-time administrative charge for using this benefit.The percentage of proceeds that you can receive is dependent upon the particular life insurance carrier you are insured by. The percentage can range from 25% to as much as 75%. Whatever the amount of the death benefit that you receive in advance, will be deducted from the total death benefit paid upon your passing.
You may wonder, does this money need to be used for medical reasons? The accelerated benefit money that you receive can be utilized for whatever purposes you choose. Having this money in advance could provide you the opportunity to pay off any outstanding debt that you may have prior to your passing. You could even use this money to complete your bucket list, or even take your loved ones on one final family vacation.
The ABR benefit is one that everyone should consider taking advantage of. Remember, there is no additional premium cost associated with it.
About the author: Jim Marcinkewicz has been in the life insurance business for over 6 years. He is a big supporter of the American Red Cross and teaches both CPR and First-Aid classes. With two daughters in college, Jim knows the expense it takes to care for your family and enjoys helping others prepare their futures as well. You can reach Jim at 1-800-651-1953 or JMarcinkewicz@Pivot.com.