Life Insurance Living Benefits
What do living benefits include?
Life insurance living benefits refer to features or options within a life insurance policy that allow the policyholder to access a portion of the death benefit while they are still alive. These benefits are typically triggered by specific events or circumstances, such as a critical illness, chronic illness, or terminal illness. Here are some common types of living benefits:
1. Accelerated Death Benefit (ADB):
- This benefit allows the policyholder to receive a portion of the death benefit early if they are diagnosed with a terminal illness and have a life expectancy of typically 12 to 24 months or less. The amount received reduces the death benefit that will be paid to beneficiaries after the policyholder's death.
2. Critical Illness Rider:
- A critical illness rider provides a lump-sum payment if the policyholder is diagnosed with a critical illness such as cancer, heart attack, stroke, or other specified serious conditions. This payment can be used for medical expenses, living costs, or any other needs.
3. Chronic Illness Rider:
- This rider allows the policyholder to access a portion of the death benefit if they are unable to perform a certain number of activities of daily living (ADLs) such as bathing, dressing, or eating, or if they require substantial supervision due to cognitive impairment.
Living benefits can provide financial flexibility and support during difficult times, offering peace of mind that funds are available to cover significant expenses or to maintain a certain quality of life. However, accessing these benefits usually reduces the death benefit available to beneficiaries.
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