Over 70% of the insurance now in force might have accelerated benefits (or living benefits, the industry's marketing term). If so, the insurer will pay out nearly the entire benefit on part or all of the policy if the insured's doctor will certify a 6-12 month life expectancy.

It's often difficult to find out if these benefits exist. Because they're frequently an addition to policies already in force, the agent often doesn't know about them. Because they're new, customer service clerks sometimes say they don't exist. Because they're rarely requested, inquiries to claims should go to a supervisor. It may even be worthwhile checking with public relations or the President's office to see if they're about to be approved. (And approval can itself take 6-12 months.)

These benefits are in all shapes and sizes: most require simply a doctor's signature and a box to check off; a few request records. Unlike viatication, the application process is simple and short. Payment is often made within weeks.

Some insurers structure the benefit as a lien against the policy, charging interest - and not issuing a 1099 to the IRS. Others consider it a payout and issue a 1099 for the income from the sale. Check with the insurer's legal department.

The IRS originally proposed regulations making accelerated benefits tax free. Then Congress decided to legislate the issue in 1994 but attached it to health care bills that didn't pass. The life insurance industry wants tax-free status since accelerated benefits boost the sales of their products. In the meantime, both California and New York have made them free of state tax. As in viatication, consider these tax questions carefully.