The policy's death benefit can be used to pay living benefits, which allow the insured to get money while they are still alive. These funds can be used for medical, hospice, nursing home, or in-home caretaker expenses.
Living benefits protect your loved ones from being held responsible for these costs if you don't have the money to support your end-of-life care. Your gifts will reduce the lump sum payment for your beneficiaries. Therefore, you'll need to decide how much to use.
You have one main reason for purchasing life insurance. It is to ensure that your loved ones receive funds after you pass. That's only a part of the story.
You want your loved ones to be able to inherit the money you have paid. This is why you should have life insurance. But that's not all.
This feature is usually included in your insurance policy. To be eligible, you must have a terminal diagnosis with a life expectancy of 6-24 months (the exact timeline will vary by insurer).
Long-term care (LTC) rider:
Perhaps you have an understanding of the advantages of life insurance. For example, how it can help to protect your loved one's assets if you die financially. However, life insurance can also offer benefits for those still alive.
Permanent life insurance policies provide the option to receive accelerated death benefits, just like term insurance.
Your life insurance policy may automatically include specific living benefit riders at no extra cost. To qualify, you'll need proof of the severity of your illness. You may be allowed to withdraw up to 80% of your policy proceeds if you can.
Only pay a death benefit if you cannot perform at least 2 ADLs. An LTC rider can be expensive, sometimes called long-term care insurance.
Premium waiver for disability. If you have a long-term disability, this living benefit allows you to skip premium payments. Although it is not a cash benefit, it can be a useful option as there's a 3 in 10 chance that you will face a disability that prevents you from working for 90 days or more at some point in your career.
Some policies allow you to access cash value and accelerate your death benefit while you're still alive. These are often referred to as "living benefits" and may be the most well-kept secret in life insurance. You might find yourself in unexpected situations, so having an additional source of income could be a great help.
It provides access to your benefit if you are unable or unable to perform two of the six Activities of Daily Living.
You can get accelerated death benefits. This living benefit covers a portion if you become ill and will pay out part of your term-life policy. This provides cash for debt repayments and medical expenses. Many people use these funds for their dream vacations or other special memories. This living benefit is available in four ways:
When you purchase your first life insurance policy, opting into a living benefit rider is standard. Many policies automatically include at least one living benefit rider, such as a terminal illness.
The living benefits offered by life insurance can be used to provide additional protection.
Policy surrender. Policy surrender is when your permanent life policy is canceled, and you can access the cash portion in a lump sum. The amount you receive from the insurer, less any outstanding loans or unpaid Premiums, will be deducted.
Long-term care benefits. You can add a permanent life insurance policy with a long-term care benefit. This allows you to access the death benefit to pay for long-term care expenses not covered by your health plan. The long-term benefits you receive reduce the death benefit. This is a significant benefit that you can have, considering that 75% of 65-year-olds today will require long-term health care.
If you're diagnosed with a terminal or critical illness, your living benefits will pay a portion of your death benefit. Although your beneficiaries will not receive as much cash, your living benefits can be used to help cover your high-end medical expenses, so your loved ones don't have to.
Another variation of this option is the "critical sickness rider," which allows you to access your Death Benefit if you have a specific illness or other condition.
A living benefit rider, an added coverage to your basic life insurance policy, provides additional benefits and protection for you. Sometimes it comes at an additional cost. When you have special needs, a rider is a great option. You can use a rider to tailor your policy to your specific needs.