What Are Life Insurance Living Benefits?

Individuals who obtain life insurance are entitled to a portion of their policy. This will in turn help to cover urgent medical care and expenses when the policyholder has a terminal illness. Automatically, living benefits are included with your life insurance policy, which means that you can always refer to it if the need arises.

What Are Life Insurance Living Benefits?

Living benefits, also known as accelerated death benefits, are included in both term life insurance and permanent life insurance policies that guarantee coverage for medical needs by granting the policyholder access to a portion of their life insurance while they are still alive.

With life insurance living benefits, individuals can access or utilize their death benefit while they are still alive. The benefits offered by this coverage provide financial aid that helps fund certain needs during the policyholder’s lifetime rather than when they pass away.

Examples of Life Insurance Living Benefits

Terminal illness 

Policyholders who are diagnosed with a terminal illness and given a life expectancy of six months to two years can make use of this rider to cover the cost and other related expenses that would speed up their medical care.

This rider helps to cover end-of-life care and other related expenses. Although a terminal illness rider is automatically included in your life insurance policy without an additional cost, we advise you to seek further inquiry from your insurance provider to understand the nuances of its coverage and the costs attached.

Chronic illness

You can use this life insurance rider you’re diagnosed with a chronic illness that prevents you from performing certain daily tasks. If you’re unable to perform two of these: bathing, eating, getting dressed, toileting, transferring, and continence, then you can make use of your life insurance living benefits.

Critical illness

Policyholders with health issues like stroke, heart attack, or kidney failure can request access to their life insurance living benefits with a critical illness rider.

Long-term care

This is also another example of life insurance living benefits. Long-term care allows policyholders to access their living benefits if there’s a need to pay for long-term care services. Also, if you are unable to perform certain daily activities defined under ADL guidelines, you can refer to the long-term care rider.

It is important to note that policyholders can only access their life insurance living benefits when they submit a claim to their insurance provider, along with medical records and other documentation that attest to the authenticity of their claims. Depending on your insurance provider, you may receive your living benefits as a lump sum or on an as-needed basis.

How Does Living Benefit Work?

Obtaining a living benefit guarantees financial security, and it works in a relatively easy way. With Living Benefits Insurance, individuals are entitled to access a portion of their death benefit before they pass on.

However, the circumstances under which the policyholder can access the death benefit must meet the qualifying requirements; it also largely depends on the individual’s plan terms. Usually, you will only be granted permission to use your living benefit insurance when you’re diagnosed with a terminal or critical illness that requires urgent care.

How Much Does Living Benefit Life Insurance Cost?

Typically, living-benefit life insurance adds an additional cost to your insurance policy owing to the fact that it includes an add-on increase in the number of qualifying circumstances that warrant you to request a death benefit from your insurance provider. Living benefit insurance is considered high-risk and, as such, will definitely cost more.

There are some insurance providers that may not request an additional charge for your life insurance. Your insurance policy automatically includes term life policies with no extra cost.

In addition, there are several other factors that will affect the cost of your living benefit insurance. They include the following:

  • Your medical history
  • Age
  • Gender
  • Height and weight
  • Coverage options.
  • Total accessible death benefits
  • Frequency of how you use tobacco products and alcohol
  • Results of an in-person medical examination

It is important that you review the coverage of your policy by seeking information from your insurance provider in order to get a better understanding of how it works and if there are other costs attached to it.

Living Benefit vs. Death Benefit?

Living benefits refer to all the advantages a policyholder gets to enjoy while still alive. With living benefits, policyholders are granted access to their death benefit while they are still alive in the face of qualifying circumstances that warrant having a portion of their insurance. Living benefits can be included as a term of policy; they could also be added to a term or whole life policy in the case of other supplemental costs.

On the other hand, a death benefit is simply the payout that the beneficiaries of a policyholder are entitled to when the policyholder dies.

Simply put, living benefits can be accessed to cover certain costs and expenses while still alive, but death benefits will be paid to relatives and family members of the policyholder after their death.

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