Posted On June 24, 2022,
When people buy life insurance, they generally focus on the death benefits that go to their loved ones. But did you know that some life insurance policies offer “living benefits” that you can tap into while you are alive? These benefits increase the value of your policy by allowing you to access your death benefit in certain situations. In this article, we’ll define what life insurance with living benefits is, how you can use them and why they’re a valuable addition to your life insurance policy. Consider working with a financial advisor as you assess your life insurance needs.
Life insurance is intended to provide financial support for the beneficiaries of someone who passes away. Most people assume that this financial support only happens after death, but some policies provide living benefits.
Living benefits are also known as accelerated death benefits. They are riders attached to a life insurance policy that allows the insured to access a portion of the death benefit while they’re still alive. In most cases, the money withdrawn through living benefits reduces the death benefit available to your beneficiaries upon your death.
Depending upon the insurer and the structure of your life insurance policy, the cost for the living benefits varies. They may be included at no extra charge or you may have to pay an additional fee on top of your monthly or annual premium in order to receive those benefits.
Life insurance with living benefits can provide support to policyholders in many ways. These are a few of the most common living benefit options available from insurance companies:
In order to receive money from your life insurance with living benefits, your claim must be approved by your life insurance company. Each company approaches claims differently and has different qualifications as to who is eligible to receive benefits. In general, here are some of the limitations that you may face when submitting a claim:
There’s no right or wrong answer to this question. Accessing your living benefits can help to ease the financial strain when you are sick or disabled. This money may even pay for experimental treatment or other care that could prolong or enhance your life. Many people would agree that this is money well spent.
However, when you submit a claim, the payouts may reduce the amount of money that you had intended for your beneficiaries. Depending on your personal financial situation, this could lead to tough financial choices for your loved ones after you pass away.
Life insurance with living benefits gives you the option to access your death benefit while you’re still alive. There are rules to determine your eligibility and limits on how much you may receive. Each insurance company has its own coverage options, rules and limits, so it pays to review policies carefully before buying life insurance. Having a life insurance professional by your side can help you review how much you need and select the policy that addresses your major concerns.
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