Term Life Insurance Enhancements for the Living
Living benefits refer to enhancements within a term life insurance policy that provide additional financial support to the policyholder while they are still living.
Unlike traditional coverage that solely focuses on the death benefit payable to beneficiaries upon the policyholder's demise, these riders allow access to funds under specific conditions, such as terminal illness or critical health events. Living Benefits add value to term life insurance by offering potential financial assistance during challenging times, thereby transforming the policy into a more versatile financial tool.
"Term life insurance with living benefits transforms the value from a simple safety net for your loved ones into a comprehensive financial tool that can support you during life's most challenging moments."
– Tom Mathews
When ‘shopping your term,’ it’s important to discuss living benefits with your financial professional as an option to enhance the value of your term life insurance policy.
How Living Benefits Enhance Term Insurance
Death Benefit: The Primary Feature
The money paid as a lump sum to your beneficiaries should the insured die while the policy is in force. Traditionally, this is the single benefit term life insurance offers.
Living Benefit Riders: Policy Enhancements
The money paid as a lump sum to your beneficiaries should the insured die while the policy is in force. Traditionally, this is the single benefit term life insurance offers.
Term Life Insurance Living Benefit Rider Options
Terminal Illness Rider
Often referred to as accelerated death benefits, this rider offers financial assistance if you're diagnosed with a terminal illness that reduces your life expectancy to two years or less, depending on the specifics of your policy. The funds can be allocated not only for end-of-life care and related costs but also for other experiences, such as taking a long-desired vacation if your health permits. While many insurance companies automatically include this rider, there may be a waiting period; the policy must remain active for a designated timeframe before you can utilize the benefit. Additionally, any amounts withdrawn will be subtracted from the total payout to your beneficiaries.
Critical Illness Rider
This rider can offer financial assistance to cover medical expenses for specific qualifying illnesses that incur significant costs and lead to a reduced life expectancy, such as a stroke, heart attack, or kidney failure, which may not be classified as terminal. Similar to a terminal illness rider, these funds are subtracted from the payout received after your death.
Chronic Illness Rider
This functions similarly to a critical illness rider but is applicable if you are diagnosed with a chronic illness that hinders your ability to perform at least two of the six designated "activities of daily living" (ADLs). These activities encompass eating, bathing, using the restroom, dressing, transferring, and maintaining continence. As with the previous case, any funds disbursed will be subtracted from your death benefit.
Return of Premium Rider
This is a specific type of term life insurance policy that reimburses the premiums you’ve paid at the conclusion of the term, provided you haven’t passed away; if you do die during the term, the death benefit will be disbursed instead. Generally, this form of term life insurance can be much costlier than a standard term policy.
Disability Waiver of Premium
This rider enables you to cease premium payments while maintaining the policy in effect if you experience a disability (an eligible injury or illness that prevents you from earning an income).
Don’t wait for your financial professional to bring it up!
Educate yourself about living benefits for term life insurance. Then ask your financial professional about these extra benefits and protections that can enable you to tailor your coverage to suit your specific requirements.
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