Life insurance is often seen as a safety net for loved ones after we’re gone, but what if it could also provide financial support while you’re still alive? With life insurance policies that include living benefits, you can access funds in times of serious illness, helping to cover medical expenses, long-term care, and other unexpected costs. Unfortunately, not all policies offer these benefits, and lacking them could leave you financially vulnerable if you experience a chronic, critical, or terminal illness. Understanding your options now can make all the difference in protecting your future.
Why Living Benefits Matter
No one likes to think about the possibility of serious illness, but statistics show that it’s more common than many realize:
- Nearly 40% of people will be diagnosed with cancer in their lifetime, and treatment costs can range from $20,000 to $30,000 per year—about half of the average annual U.S. household income (American Society of Clinical Oncology).
- The U.S. Department of Health and Human Services reports that 70% of Americans aged 65 and older will require long-term care at some point in their lives.
Living benefits provide financial relief by allowing policyholders to access a portion of their death benefit while they are still alive. These funds can be used for medical expenses, in-home care, long-term care, or any other financial needs that arise due to a qualifying illness.
How Do Living Benefits Work?
Living benefits come in the form of life insurance riders, also known as accelerated death benefits. They allow policyholders to access a portion of their policy’s death benefit if they experience:
- Terminal Illness: If diagnosed with a terminal illness and given a life expectancy of six months to two years (varies by insurer), you can access funds to cover end-of-life expenses and medical care.
- Chronic Illness: If you are unable to perform at least two of the six “Activities of Daily Living” (ADLs)—such as eating, bathing, or dressing—you may qualify for living benefits.
- Critical Illness: If you suffer from a serious illness such as a heart attack, stroke, or kidney failure, you can use the funds for medical expenses and other financial needs.
- Long-Term Care: If you require extended long-term care and cannot perform at least two ADLs, you can use your life insurance benefits to help cover these costs.
How Much Can You Access?
The amount you can access depends on your policy and provider. Typically, the insurance company will review your case and determine the severity of your condition and will make an offer (e.g., 80%) of your policy’s death benefit, either as a lump sum or in periodic payments. Keep in mind that accessing living benefits will reduce the payout your beneficiaries receive after your passing. You do not have to take the offer, and you can also choose to take a percentage of the offer to leave the remainder in the life insurance policy.
Are Living Benefits Included in All Policies?
Not all life insurance policies come with living benefits automatically. Some policies include them at no additional cost—such as a terminal illness rider—while others require an additional fee for riders like chronic or critical illness coverage. Not sure if your policy includes them? Reach out to us today to do a policy review and we will let you know if your current policy has them or not. If you are healthy, it may make sense to trade up to a policy with living benefits.
How to Get a Life Insurance Policy with Living Benefits
If you don’t already have a policy with living benefits, now is the time to explore your options. When shopping for life insurance, ask about policies that include these riders or allow you to add them later. Some policies may have a waiting period before you can access benefits, so it’s essential to plan ahead. At Brightside Financial, we are an independent agency which means that we can shop for the best terms available based on your individual needs.
Take Control of Your Financial Future
Life is unpredictable, but you can prepare for the unexpected. A life insurance policy with living benefits can provide you and your loved ones with the financial security needed in times of illness and hardship.
Want to learn more about how you can protect yourself with life insurance that includes living benefits? Click on the link below to schedule your no cost consultation to secure coverage that best fits your needs.
