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Life Insurance with Living Benefits Provided By Our Agency
Life insurance could also benefit you while you’re still alive. Some life insurance policies come with living benefits—funds you can tap into while you’re still alive. These living benefits exist to provide financial support if you are diagnosed with a terminal illness, chronic illness or require long-term care.
What is Life Insurance with Living Benefits?
Living benefits essentially allow the insured to access money from the policy’s death benefit while they’re still alive. These funds can be used to pay for expenses associated with terminal or chronic illness, such as medical care, hospice or nursing home care, in-home caretakers and more. The trade-off is that accessing living benefits reduces the death benefit available to your beneficiaries when you die.
Living benefit options for Term Life Include:
- Accelerated death benefits. This living benefit pays out a portion of your term life policy if you ever face a terminal illness. This gives you needed cash to cover medical expenses, debt and more. Many people also use the funds to take a dream vacation or make other memories with their loved ones. Here are four things in mind when it comes to this living benefit:
- Different insurers have different life expectancy timelines for when you can access the cash.
- The policy may need to be in force for a certain amount of time before you can access the living benefit.
- You may be charged interest on the portion of the accelerated death benefit that you use.
- The advanced amount is typically subtracted from the total amount your beneficiaries receive after you pass away.
- A variation on this option is called a “critical illness rider” that lets you access your death benefit if you’re afflicted by a specific ailment or disease.
- Return of premium. With this living benefit, all the premiums you paid during the term are returned to you so long as you don’t pass away during the term. You typically pay more for this kind of policy than you would for a traditional term life policy.
- Disability waiver of premium. This living benefit lets you skip your premium payments in the event you suffer from a long-term disability for six months or more. While not a true cash benefit, it nonetheless is a valuable option to have since there’s a three in 10 chance you’ll face a disability that keeps you out of work for 90 days or longer at some point during your working career.
Living benefit options for Permanent Life Insurance.
- Cash value withdrawal. A withdrawal lets you access a portion of the cash value of your permanent life policy. You won’t owe any taxes on this withdrawal if the amount you withdraw is less than or equal to your premium payments. However, you will owe taxes if any portion of the amount you withdraw is from interest, dividends or capital gains. Also be aware that the amount you withdraw will be subtracted from the policy’s death benefit if it’s not repaid.
- Policy loan. You’ll be charged interest if you take out a loan against your permanent life policy, but it’s usually lower than the interest charged by other lenders. You also won’t have to undergo a credit check or abide by a long list of restrictions.
- Policy surrender. A policy surrender is when you cancel your permanent life policy to access the cash value portion as a one-time lump sum. The insurer will give you that amount, less any outstanding loans and/or unpaid premiums.
- Long-term care benefits. Adding a long-term care benefit to your permanent life policy lets you tap into the death benefit to cover long-term care expenses that your health insurance doesn’t cover. The death benefit is typically reduced by the amount of the long-term benefit that you use. It’s a valuable living benefit to have when you consider that 70 percent of people turning 65 today will need some form of long-term care in their lives.
- Terminal illness: If you are given a terminal diagnosis with a life expectancy of six months to two years (the exact timeline depends on the insurer), you can use this rider to cover end-of-life care and other associated expenses. A terminal illness rider is often automatically included in the policy without extra cost, but you should check with your insurer to find out.
- Chronic illness: This rider applies if you’re diagnosed with a chronic disease that prevents you from performing at least two of the six “activities of daily living” (ADLs). These are bathing, eating, getting dressed, toileting, transferring, and continence.
- Critical illness: You can also access living benefits with a critical illness rider, covering qualifying illnesses that shorten life expectancy and have high medical costs. Examples include heart attack, stroke, and kidney failure.
Already have Life Insurance with Living Benefits ? Switching is easy
It might be time to switch insurers whenever the service that your existing insurer provides doesn’t meet your needs. For example, if you have a poor claims experience or an unexplained rate increase, it might be time to consider other options
If you cancel a previous policy before a new policy is effective, you could run into some serious financial problems.
Contact us today to help you with multiple options to choose from.
If you cancel a previous policy before a new policy is effective, you could run into some serious financial problems.
Contact us today to help you with multiple options to choose from.
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Simplified Issue.
Terms 30, 25, 20, & 15 year level premium.
Universal Life with Cash Back options.
Return of Premium (ROP).
Accelerated Benefit Riders
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