When most people hear “life insurance,” they think of a payout after death – something meant only for their loved ones. But what if your life insurance could also help you while you’re still alive? That’s exactly what life insurance with living benefits is designed to do.
It’s financial protection not just for your family’s future, but for your present too.
What Are Living Benefits?
Living benefits are features within a life insurance policy that allow you to access part of your death benefit while you’re still alive – usually in case of serious illness, injury, or chronic conditions.
These benefits can come in handy during medical emergencies or unexpected life events, and they don’t require you to die for the policy to be useful.
Types of Living Benefits
Here are the most common types of living benefits you might find in a policy:
1. Chronic Illness Rider
If you’re diagnosed with a chronic condition that limits your ability to perform daily activities (like bathing, dressing, or eating), this rider can allow you to access funds from your death benefit to pay for care or other expenses.
2. Critical Illness Rider
In the event you’re diagnosed with a serious illness such as cancer, heart attack, or stroke, a critical illness rider can provide a lump sum payment. This money can help cover out-of-pocket medical costs, lost income, or even travel for treatment.
3. Terminal Illness Rider
This is one of the most common riders. If a doctor certifies that you have a terminal illness and a life expectancy of less than 12–24 months, you can receive a portion of your policy’s death benefit early to use however you need.
How Do Living Benefits Work?
If your policy includes living benefits (some term and most permanent policies offer them), you can file a claim and submit medical documentation if you meet the criteria.
Once approved, the insurance company will issue a payout – often a percentage of the full death benefit. For example, if your policy has a $500,000 death benefit and you access $100,000 for a chronic illness, your beneficiaries will receive $400,000 upon your passing.
Real-Life Example
Imagine you’re 55 and are diagnosed with early-onset Alzheimer’s. You still have years ahead of you, but now need help with daily living. Instead of draining your savings, a life insurance policy with a chronic illness rider could provide financial support – without the burden falling on your family.
Key Benefits
- Early access to funds when you need them most
- Financial flexibility during health-related emergencies
- Peace of mind knowing your policy serves more than one purpose
Is It Expensive?
Here’s the good news: Many insurance companies offer living benefit riders at no extra cost, especially for term life insurance policies. However, some specialized riders may require an additional fee.
Always read the fine print to know what’s included and what may cost extra.
Who Should Consider This?
Life insurance with living benefits is ideal if you:
- Have a family history of serious illness
- Are concerned about healthcare costs later in life
- Want added security and flexibility in your financial planning
Things to Keep in Mind
- Accessing living benefits reduces the final death benefit
- There may be eligibility criteria and medical documentation required
- Policies vary – not all offer the same riders
It’s a good idea to speak with a licensed insurance advisor to compare policies and riders based on your needs.
Final Thoughts
Life insurance with living benefits bridges the gap between “what if” and “what now.” It offers a way to use your coverage while you’re alive, when you might need it most.
Instead of waiting for a benefit your family may use someday, why not choose a policy that can support you in the moments that matter?