Once upon a time, that’s all life insurance did – the basics. However, today’s life insurance policies can be simple (if that’s what you’re looking for), or feature-packed and more customized to your needs. Life insurance policies now can even pay living benefits. (Yes, that means what you think it means.) Your policy can pay benefits even if you are still alive.
Term Life Insurance Living Benefits
Usually, a term life policy is among the most basic of policies, providing a fixed death benefit. It provides coverage for a limited time at a guaranteed rate. But many companies are now offering a rider (an add-on feature) that can provide living benefits with a term policy.
Living benefits allow you to access the value of your policy under certain conditions:
- Critical illness
- Chronic illness
- Terminal illness
Living benefits also provide access to money from your policy in the case of chronic illness or critical illness.
Chronic illness can be a little confusing. Insurers are usually looking at the six activities of daily living (ADL): eating, bathing, transferring (walking), dressing, toileting, and continence. If your chronic illness prevents you from performing these activities, you may be eligible to receive a portion of your death benefit in advance.
Critical illness such as a heart attack, stroke, cancer, and some other illnesses can also make you eligible for an advance payment of your death benefit.
Not all term policies offer living benefits for chronic illness or critical illness, but an increasing number are offering this option as a rider, and a handful are offering this expanded coverage as a built-in benefit of the policy.
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