What are Living Benefits?
Living Benefits refer to a feature within some life insurance policies that enables policyholders to access a portion of the policy’s death benefit during their lifetime. These benefits are typically available in cases of terminal illness, chronic illness, or critical illness, providing financial support during challenging times.
For example, if a policyholder is diagnosed with a terminal illness and needs funds to cover medical expenses or maintain their quality of life, Living Benefits allow them to draw from their life insurance policy’s death benefit to meet these needs. This can relieve financial stress for both the individual and their family, as it provides additional funds when they may be most needed.
In the context of term life insurance or final expense insurance, Living Benefits can be particularly valuable. Term life policies with Living Benefits offer an extra layer of protection, helping policyholders manage significant medical expenses or other end-of-life costs. Meanwhile, final expense insurance policies that include Living Benefits ensure policyholders can address pressing financial concerns, like healthcare costs, without depleting other savings.
Many people find policies with Living Benefits advantageous, as they offer peace of mind knowing they have access to their life insurance benefit if they encounter serious health issues. However, using these benefits may reduce the overall death benefit available to beneficiaries, so it’s important to consider the potential long-term impacts.