Living benefits are also known as accelerated death benefits, or living benefits riders, when it comes to permanent life insurance policies. They are features or options added to a life insurance policy that allow the policyholder to receive a portion of the death benefit while still alive, under certain circumstances. These benefits are designed to provide financial support if the policyholder becomes chronically ill, critically ill, or terminally ill. You may able to access up 75% – 80% of the death benefit. This varies from company to company.
IMPORTANT NOTE: It’s important to note that the availability and terms of living benefits can vary depending on the insurance company and the specific policy. Policyholders should carefully review their insurance policies and consult with their licensed insurance professional to understand the details and limitations of living benefits.
Accelerated Death Benefit
1. Accelerated Death Benefit (ADB): This allows the policyholder to receive a portion of the death benefit if they are diagnosed with a terminal illness that is expected to result in death within a certain period, often two years. The benefit can help cover medical expenses, hospice care, or other costs associated with the illness.
Chronic Illness Rider
2. Chronic Illness Rider: This rider allows the policyholder to access a portion of the death benefit if they are certified as chronically ill. Chronic illness typically refers to a condition that impairs the individual’s ability to perform essential daily living activities, such as bathing, dressing, or eating. The funds can be used to cover long-term care expenses or other needs arising from the illness.
Critical Illness Rider
3. Critical Illness Rider: This rider provides a lump-sum payment if the policyholder is diagnosed with a critical illness specified in the policy. Critical illnesses may include heart attack, stroke, cancer, or other major health conditions. The benefit can be used to cover medical costs, treatment expenses, or other financial obligations during the recovery phase.
Critical Injury Rider
4. Critical Injury Rider: This rider provides financial support to the policyholder in the event of a critical or catastrophic injury. Similar to the terminal illness rider, the specific terms and definitions may vary among insurance policies. However, critical injury typically refers to severe injuries that are specifically listed in the policy, such as paralysis, loss of limbs, or the inability to perform daily activities independently. If the policyholder suffers a qualifying critical injury, they may be eligible to receive a lump sum or periodic payments from their life insurance policy.
Terminal Illness Rider
5. Terminal Illness Rider: This rider allows the policyholder to access a portion of their life insurance death benefit in the event that they are diagnosed with a terminal illness. The specific criteria for what qualifies as a terminal illness may vary depending on the insurance policy and provider, but generally, it refers to a condition where the individual’s life expectancy is limited (e.g., usually less than 12-24 months). By utilizing this rider, the policyholder can access the funds during their lifetime to cover medical expenses, hospice care, or any other needs they may have.
