An accelerated death benefit (ADB) lets the insured use part of the death benefit while still alive. It is life insurance paid early, not health or long-term care insurance, and California law says it may not be sold or marketed as health, accident or long-term care insurance (§10295).
Qualifying events (§10295):
- A medical condition that, without treatment, would result in death within a limited period defined in the policy. The policy may define that period, but it may not be shorter than 6 months.
- Chronic illness as defined in the Insurance Code (for tax-qualified versions, certified by an independent licensed health care practitioner).
Many products also add critical illness triggers.
Key consumer rights (§10295.1): the insured may take the benefit as a lump sum or in periodic payments for a certain period only; payment is not conditioned on receiving care or medical services; the insured may use the money for anything; any accidental death benefit on the remaining death benefit is not affected.
Training:
Long-term care insurance (§10234.93): 8 hours of LTC training before soliciting, 8 hours in each of the first four 12-month periods of licensing, then 8 hours before each license renewal.
An ADB rider that requires personal care services for a chronically ill insured triggers the LTC training requirement; one that does not require care services does not (exam outline I.C2.19 and III.1.g).
Annuity training is different: 8 hours before selling annuities and 4 hours before each renewal (§1749.8).
Agents must be able to explain the differences between an ADB and LTC insurance, including benefit triggers, elimination periods, benefit limits, tax treatment, and the effect on the death benefit.