Life insurance with living benefits, also known as accelerated death benefit riders, provides the policyholder with financial assistance while they are still alive and facing certain qualifying medical conditions or situations. This feature allows policyholders to access a portion of their life insurance benefits before their death to help cover medical expenses, long-term care costs, or other financial needs.

Here are some key points to understand about life insurance with living benefits:

Qualifying Events:

The specific qualifying events or conditions may vary depending on the insurance policy and the insurance provider. Common events that may trigger the use of living benefits include terminal illness, critical illness, chronic illness, or permanent disability.

Benefit Payout:

The policyholder can request a payout of a portion of the death benefit while they are still alive. The amount that can be accessed depends on the policy’s terms and the severity of the condition or event. It’s important to note that the benefit payout reduces the death benefit available. 

Intended Use of Payout:

The funds received through living benefits can be used at the policyholder’s discretion. They may be utilized to cover medical expenses, pay for long-term care services, make necessary modifications to the home for disability accommodation, or address other financial needs arising from the qualifying event.

Policy Limitations:

There may be limitations on the availability and amount of living benefits depending on the policy. Some policies may require a waiting period or have specific criteria that must be met before the benefits can be accessed. 

Impact on Premiums:

Adding living benefits to a life insurance policy may affect the premium amount. Policyholders should consider the cost implications and evaluate whether the benefits provided outweigh the potential increase in premiums.

Life insurance with living benefits can provide individuals with added flexibility and financial support during challenging times. However, it’s essential to thoroughly review and understand the terms, conditions, and limitations of the policy, and consult with an insurance professional or advisor to determine if this type of coverage is suitable for your specific needs.

Roy Snarr has built a multi-million dollar business marketing and selling asset protection strategies for “safe” retirement.  CFF®, CLTC®, NSSA ®, LACP