Insurance with Infiniti Episode 13: 🛡️ What Are Living Benefits?

As a life insurance broker, living benefit packages are my absolute favorite policies to present to clients! Regular life insurance is great but when I can get my clients additional coverage for life's mishaps, it makes me feel good inside.

🛡️ So what are living benefits?

The primary purpose of any life insurance policy is to provide financial protection for your loved ones after you pass away. However, life insurance can also provide “living benefits” – features and protections that can help you while you’re still alive.

🛡️ There are two main types of living benefits in life insurance:

Policy riders. A life insurance rider is an add-on to your policy that provides additional protection. Some policy riders allow you to receive part of the policy’s death benefit in some circumstances, like if you’re diagnosed with a serious illness or you need long-term care.

Cash value life insurance. Permanent life insurance policies have a built-in savings component called cash value that grows over time. You can usually take a loan or withdraw from the policy’s cash value. Some people use their policy’s cash value to supplement their retirement income.

Some common types of living benefits riders include:

🛡️ Accelerated death benefit rider. This feature pays out some or all of a policy’s death benefit if you’re diagnosed with a serious illness. Your payout reduces the benefit that your survivors will receive after you die.

🛡️ Long-term care rider. An LTC rider pays part of your policy’s death benefit if you require long-term care that traditional health insurance doesn’t cover. Your policy may pay out a lump sum or a percentage of your death benefit each month. As with an accelerated death benefit rider, the payout may reduce the amount your beneficiaries receive. Many policies have a waiting period of about 90 days before you can access this benefit.

🛡️ Return-of-premium rider. A return-of-premium rider will refund some or all of your term life insurance premium payments if you outlive your policy term. This is something that is most popular among young, healthy clients!

🛡️ Waiver of premium rider. This benefit allows you to suspend life insurance premium payments while keeping the policy in force if you become disabled and can no longer work. Many policies have a waiting period of a few months to a year from the time of the diagnosis until this benefit will kick in, though many insurers will reimburse you for premiums paid during this window if your claim is approved.

It’s important to think about whether you need life insurance with living benefits while you’re shopping for a policy. You typically can’t add riders to an existing policy. Make sure you read your contract thoroughly so you know whether any riders are automatically included and how the riders work.

Ask your life insurance agent or broker about the cost of any additional living benefit riders.

If you reside in Missouri (MO) or Michigan (MI) reach out today, I'd love to help you!