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Topic: Accelerated death benefits, anyone?

Forum: Stage IV/Metastatic Breast Cancer ONLY —

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Posted on: Nov 21, 2013 04:16PM

raro wrote:

So I was talking with the insurance lady today and she said it looked like I could get my life insurance policy pretty easily, within "3 days to 3 weeks." That would be good, considering I'm now permanently unemployed and disability won't start for 5 months and I have NO INCOME and a mortgage to pay...

Anyway, she made a weird comment that I'm hoping those of you who have chosen to get your insurance early would understand. I asked her if the money was taxable, and she said, "That depends entirely on what you are going to use the money for. You will have to talk to your tax advisor." I almost snorted into the I have a tax person?! I'm too poor to pay someone else to do my taxes!

Anyway, do you all have any clue what she meant? She was a very nice lady who suggested I use the money to splurge and go travel or something. All I could think of was, no, I'll use it to be able to afford to stay in my house! But it was nice of her to say that. But I don't want to assume I'm going to get a bunch of money only to find that half of it goes into taxes...

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Nov 21, 2013 05:58PM Lauriesh wrote:

The money isn't taxable and I think she was wrong. I don't think how you use the money matters. We used it to pay bills and we didn't pay taxes on it.


3/2005 stage 2, 7/2010- liver mets. Er/pr- her2+
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Nov 21, 2013 06:39PM JillThut wrote:

Last I checked it was completely non taxable. Makes no difference what you use it for. I think the insurance woman probably had no idea and didn't want to admit to that so threw out a statement she thought might sound right.

bone, liver and brain mets Jill Dx 10/6/2009, Stage IV, mets Dx IDC, Stage IV, Grade 3, 0/8 nodes, mets, ER+/PR+, HER2-
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Nov 21, 2013 06:44PM - edited Nov 21, 2013 06:45PM by JillThut

Accelerated Death Benefits

Certain amounts paid as accelerated death benefits under a life insurance contract or viatical settlement before the insured's death are generally excluded from income if the insured is terminally or chronically ill. However, see Exception , later. For a chronically ill individual, accelerated death benefits paid on the basis of costs incurred for qualified long-term care services are fully excludable. Accelerated death benefits paid on a per diem or other periodic basis without regard to the costs are excludable up to a limit.

In addition, if any portion of a death benefit under a life insurance contract on the life of a terminally or chronically ill individual is sold or assigned to a viatical settlement provider, the amount received also is excluded from income. Generally, a viatical settlement provider is one who regularly engages in the business of buying or taking assignment of life insurance contracts on the lives of insured individuals who are terminally or chronically ill.

To report taxable accelerated death benefits made on a per diem or other periodic basis, you must file Form 8853, Archer MSAs and Long-Term Care Insurance Contracts, with your return.

Terminally or chronically ill defined. A terminally ill person is one who has been certified by a physician as having an illness or physical condition that reasonably can be expected to result in death within 24 months from the date of the certification. A chronically ill person is one who is not terminally ill but has been certified (within the previous 12 months) by a licensed health care practitioner as meeting either of the following conditions.
  • The person is unable to perform (without substantial help) at least two activities of daily living (eating, toileting, transferring, bathing, dressing, and continence) for a period of 90 days or more because of a loss of functional capacity.

  • The person requires substantial supervision to protect himself or herself from threats to health and safety due to severe cognitive impairment.

Exception. The exclusion does not apply to any amount paid to a person other than the insured if that other person has an insurable interest in the life of the insured because the insured:
  • Is a director, officer, or employee of the other person, or

  • Has a financial interest in the business of the other person.

bone, liver and brain mets Jill Dx 10/6/2009, Stage IV, mets Dx IDC, Stage IV, Grade 3, 0/8 nodes, mets, ER+/PR+, HER2-
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Nov 21, 2013 07:48PM raro wrote:

Thank you, Jill. It was puzzling because the woman admitted that she was not a tax person, but she seemed to be "supposed" to make that statement. She freely admitted she had no idea what it all meant, at least. But it worried me a bit. My brother asked if I could make my minor child a beneficiary, and then I would control the money because he is a minor, of course. I don't think that's possible, though, since I'm the one who owns the policy. It's all very confusing!

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Nov 22, 2013 08:14AM JeninMichigan wrote:


Just wanted to say good for you getting your accelerated benefits. I took mine back in 2010 and have paid no taxes. I was shocked at how quickly I got my check.. it was less than 10 days. Once in a while I worry now that it is 3 1/3 years later and I am still well alive if they will come back after me but looks like I am safe. Hopefully it will releive some financial stress from you!


Dx 2/22/2008, IDC, 2cm, Stage IV, Grade 3, 4/9 nodes, mets, ER+/PR-, HER2+
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Nov 22, 2013 01:27PM pattih wrote:

I did it this year and you do not have to pay taxes. I used mine to pay off our mortgage. My husband had just lost his job in May so I wanted that out of the way. He got a job (yeah) less pay (boo!) but we can manage becasue the house is paid for (double yeah!)

Dx 12/15/2003, IDC, Stage IV, Grade 3, mets, ER+/PR-, HER2-
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Nov 22, 2013 02:35PM JillThut wrote:

The accelerated death benefit I took from my policy at work back in 2010 was not only a tax free transaction but also if you don't die on schedule the money doesn't have to be repaid. That policy allowed for taking up to 75 percent of the value. The remaining 25 percent is there for my beneficiaries and because I left work due to a terminal condition prior to retirement age the premium is also waived.

I also have an individual term life policy that I took out two years pior to my breast cancer diagnosis. That policy requires that you have less than 6 month life expectancy in order to access up to 75% as a death benefit. It also charges interest on the money taken so the remaining 25% could be eaten up rather quickly and therefore not be there for the beneficiaries which is why for now I have chosen to leave that one alone.

Just some food for thought..

bone, liver and brain mets Jill Dx 10/6/2009, Stage IV, mets Dx IDC, Stage IV, Grade 3, 0/8 nodes, mets, ER+/PR+, HER2-
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Nov 22, 2013 02:45PM Chickadee wrote:

Raro, you can create a trust for your child no matter the source of the money. Trusts are tricky si its best to talk to your banks trust dept if they have one or a lawyer who specializes in trusts.

I'm in such bad shape, I'm wearing prescription underwear." Phyllis Diller 1917-2012 Dx 9/1/2009, IDC, 1cm, Stage IV, Grade 3, mets, ER+/PR+, HER2-
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Nov 22, 2013 07:04PM raro wrote:

Well, I talked to my sister in law, and she also said that trusts are tricky and can be expensive. So maybe not a trust. My brothers were very worried when they heard about this policy because they had all heard that some policies require you to pay back money if you live past a year. I specifically asked the woman on the phone, and she said, "Heavens, no! If you live past a year, we're thrilled!" She said that I could take part or ALL of the policy money, which would certainly let me live comfortably, if frugally. This is a policy I never knew I had, that came with my job, and I already have another one to provide for my youngest child after I die, so it's essentially free money! Considering I was fired, I think it's a great payback, don't you?! I already talked to the lady about retirement vs firing and she said it doesn't matter, it's my policy regardless.

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Nov 22, 2013 08:57PM Fitztwins wrote:

Got mine in 2010 no taxes..

Enjoy Every Sandwich. Dx 12/12/2004, IDC, Left, 3cm, Stage IV, metastasized to bone/lungs, Grade 2, mets, ER+/PR+, HER2+ (FISH) Surgery 1/18/2005 Lymph node removal: Left, Underarm/Axillary; Mastectomy: Left; Reconstruction (left): Free TRAM flap Chemotherapy 1/31/2005 AC + T (Taxol) Radiation Therapy 4/30/2005 Breast, Lymph nodes Targeted Therapy 5/31/2005 Herceptin (trastuzumab) Hormonal Therapy 12/31/2005 Femara (letrozole) Hormonal Therapy 6/1/2008 Aromasin (exemestane) Targeted Therapy 6/30/2008 Herceptin (trastuzumab) Hormonal Therapy 6/14/2013 Arimidex (anastrozole) Targeted Therapy 9/4/2015 Perjeta (pertuzumab)
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Nov 23, 2013 12:29PM SusanR wrote:

Got one of mine in 2012 and 50% of another just recently and all tax free!

IDC 2002 Stage II Grade 3 4/29 nodes ER/PR+ Her2- Stage IV Dec 2008 Bone ER+/PR-/Her2- Bone Progression Oct.2011 to Spine,Skull and Rib Dx 11/22/2002, IDC, Stage IIIC, Grade 3, 4/29 nodes, mets, ER+/PR+, HER2- Surgery 11/24/2002 Lumpectomy: Right; Lymph node removal: Right, Sentinel; Mastectomy: Left, Right; Prophylactic mastectomy: Left; Reconstruction (left): DIEP flap; Reconstruction (right): DIEP flap Chemotherapy 1/6/2003 Cytoxan (cyclophosphamide), Taxotere (docetaxel) Chemotherapy 1/6/2003 Adriamycin (doxorubicin) Chemotherapy 1/6/2003 Cytoxan (cyclophosphamide) Radiation Therapy 7/4/2003 Breast Hormonal Therapy 10/10/2003 Hormonal Therapy 10/7/2008 Femara (letrozole) Radiation Therapy 1/19/2009 Bone Hormonal Therapy 10/9/2011 Faslodex (fulvestrant) Targeted Therapy 12/1/2016 Ibrance (palbociclib) Hormonal Therapy 12/6/2016 Femara (letrozole)
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Nov 23, 2013 06:31PM raro wrote:

Bon, for some reason the link isn't working. Any way to repost it? I would be very interested in reading it.

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