What Are Living Benefits In Life Insurance—And Why They Matter
Most people think of life insurance as something that helps their loved ones after they’re gone. But did you know that some life insurance policies can also help you while you’re still alive?
These features are called living benefits, and they’re becoming more common in both term and permanent life insurance policies. Living benefits allow you to access part of your policy’s death benefit if you experience a serious health condition—giving you financial support when you need it most.
What Do Living Benefits Cover?
Living benefits typically come in the form of riders—optional add-ons to your life insurance policy.
The most common types include:
– Terminal Illness Rider
If you’re diagnosed with a terminal illness and have a life expectancy of 6 to 24 months (depending on the insurer), you may be able to access a portion of your death benefit to help cover medical expenses, hospice care, or other needs.
– Chronic Illness Rider
This rider applies if you’re unable to perform at least two of the six basic activities of daily living—like bathing, dressing, or eating. It can help pay for in-home care or assisted living.
– Critical Illness Rider
If you’re diagnosed with a serious condition such as cancer, heart attack, or stroke, this rider may allow you to access funds to help with treatment costs and recovery.
Some policies also offer long-term care riders, which can help cover extended care needs later in life.
Why It Matters
Living benefits can provide peace of mind and financial flexibility during difficult times. Instead of relying solely on savings or borrowing, you can use part of your life insurance benefit to:
– Pay for medical treatments or caregiving
– Cover household expenses while you recover
– Avoid dipping into retirement funds or emergency savings
Keep in mind that using living benefits will reduce the amount your beneficiaries receive later. But for many people, the ability to access funds during a health crisis is worth it.
What Should You Do?
Not all life insurance policies include living benefits automatically. Some riders may be added at no extra cost, while others require a small premium increase. Here’s how to get started:
– Review your current policy to see what’s included
– Ask your agent about adding living benefit riders if they’re not already part of your coverage
– Consider your health history and financial goals when deciding whether these features make sense for you
Living benefits aren’t just about preparing for the worst—they’re about having options when life takes an unexpected turn.
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