What are the “Living Benefits” on Life Insurance Policies?
Living benefits are now being built into a lot of term and permanent life insurance policies. Examples of these “living benefits” are:
Terminal Illness – doctor says you have two years or less to live
Chronic Illness – you need assistance with eating, bathing, dressing, toileting, transferring, and going to the bathroom (continence).
Critical Illness – cancer, stroke, heart attack, major organ transplant, kidney failure, etc.
If you are searching for life insurance, check out the pricing of policies with accelerated benefit riders vs. those without them. Depending on where you are looking policies with accelerated benefit riders the cost difference is surprising. Living benefits were originally only included on permanent whole life type policies, but now several life insurance companies are issuing level term policies with these same benefits.
Accelerated living benefits can add further piece of mind because the insured does not have to die for the death benefit to be paid out, they can be alive and receive a portion the death benefit. The acceleration of the death benefit in the event of a terminal, chronic, or critical illness will decrease the death benefit, so make sure to take this into account when deciding on the correct amount of life insurance.
It is prudent to review your life insurance policy and make sure you understand how benefits are triggered. While you are doing that, make sure your primary and contingent beneficiaries are properly designated with the correct percentages. Take a few minutes and speak with an independent life insurance agent who can shop around and come up with options. If you could pay the same price or less for a policy that includes more benefits, wouldn’t it make sense to switch?
If you need help, give us a call or schedule an appointment online with Carter Gray CLU (chartered life underwriter). Our team based out of Washington State will be more than happy to assist.