Living Benefits of Life Insurance

Life insurance with living benefits means that you can tap the death benefit amount that over the term of your policy to pay for qualified expenses. This means that if you are suffering from conditions that are stated in the policy itself, you can request a little, some, most, or the entire death benefit amount for any need or desire that you have.

Living benefits is the one way that the policyholder and not the beneficiary can tap the benefit amount of the life insurance policy. There are qualifications and the amount requested must be approved, but it can help those who need additional income to pay expenses because of a qualifying illness, injury, disease or the inability to take care of yourself (long-term care needs).

The money you receive from the policy is an acceleration of the death benefits. You do not need to use the money to pay for expenses that are attributed to any particular illness, injury or long term care. The money can be used for any purpose.

Qualifications for benefits under the policy

Depending on the insurance company and policy requirements, there are many different types of illnesses, injuries, and conditions that qualify. The list of conditions that qualify is an extensive one, but for those who are considering purchasing a life insurance policy with living benefits, it is best to check the conditions that qualify for the policy under consideration.

Qualify under the chronic illness benefit, for long term care

A licensed healthcare practitioner must certify that the policy holder cannot perform at least two out of the six recognized conditions of daily activities for at least 90 days due to one or more of the following;

- Inability to Bath

- Incontinence

- Unable to Dress Alone

- Incapable of Eating

- Cannot go to the Toilet

- Moving from one Location to Another

The final condition implies that the person cannot move in or out of a chair, wheelchair, or bed on their own. To perform the functions, substantial assistance* is required by another person. The medical condition causing this lack of function may be physical or mental impairment that is properly certified.

Keep in mind that this is not long term care insurance but rather a life insurance benefit that is made available when the insured is cannot perform at least two activities of daily living. Although the money received can be used for long term care expenses, it is not long term care insurance.

This may sound confusing but the point is that long term care insurance may provide greater benefits and features than those found in the chronic illness benefit of a life insurance policy.

For example, your life insurance policy may have a “substantial assistance*” requirement to qualify for chronic illness benefits, whereas a long term care policy may have a requirement that only calls for “stand-by assistance”, a much easier requirement to satisfy before benefits are paid.

Exclusions for certain acts

A disqualifier is if the condition was caused by a self-inflicted wound or from an attempted suicide. If either event occurred, then the living benefits will not be granted.

Determination of benefits

With most insurance companies, the determinations will be made based on the severity of the illness, injury, or condition. There are four basic standards used to quantify severity of the conditions which includes the following;

- Minor

- Moderate

- Severe

- Life Threatening

The more severe the condition, the higher the payout of the benefit will be. This means that living benefits can be used even if the condition has a minimal effect on your standard of living. Therefore, it is possible to tap the living benefits while still being able to live a relatively normal life.

A qualified, recognized medical practitioner will be needed to assess the condition and determine its severity. The more serious the condition, the more that may be paid out by the policy. So, such determinations will need to be made in accordance to the conditions stated in the policy itself.

Critical Injury benefits of life insurance

While many policyholders who claim living benefits have suffered from serious medical conditions or illnesses such as cancer, heart disease, and the like, there is also a component for sustaining a critical injury. Any injury which is severe enough to prevent someone from fulfilling at least two of the six conditions required for normal living for at least 90 days will qualify. Such conditions include paralysis, brain injury, 3rd degree burns, or falling into a coma.

In some cases, the exact injury requirements may not be fully stated. Rather, only the effects of the injuries themselves. A policyholder can always refer to the policy consult to determine whether an injury may qualify for the living benefits of the policy. The determining factors should be the extent of what happened, not its exact cause.

For policyholders who are still in good health, obtaining life insurance with living benefits offers a means to pay off associated expenses. Even if you are in good financial condition and have medical insurance which covers the treatments, having access to living benefits means that you do not have to tap into your personal savings to pay important expenses.

Small Premium, Big Benefits

The best part is that living benefits are part of the policy and do not cost extra. For a small monthly premium, a life insurance with living benefits may protect your financial status at a time that you need it most.


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