Life insurance isn’t just about protecting your loved ones after you’re gone—it can also support you while you’re still here. That’s where “living benefit” riders come in. These riders can help enhance your term or permanent policy by providing access to funds that can offer financial flexibility during unexpected medical events. While the benefits require the diagnosis of a qualifying condition to begin, the funds can be used however you choose—they are not restricted to medical expenses.
These riders may be included as a standard feature on your policy, and others may be offered as optional add-ons for an additional cost. Let’s take a closer look.
Accelerated death benefit riders
Accelerated death benefit riders allow you to access a portion of your life insurance death benefit in advance when you face certain health challenges. The funds can help cover medical bills, home care or other expenses so you can focus on what matters most with less financial stress. But note that using this accelerated death benefit reduces the amount your beneficiaries receive later.
Here are the most common types of accelerated death benefit riders:
- Terminal illness: If you’re diagnosed with a terminal illness,* this rider provides early access to a percentage of your death benefit to help with medical bills, end-of-life care or anything else that brings you comfort.
- Chronic illness: If you’re diagnosed with a chronic illness,* this rider allows you to use part of your death benefit to help provide financial support to help cover medical costs, long-term-care costs, or whatever else you need.
Disease-specific riders
Other living benefit riders offer benefits upon diagnosis of a specific condition, such as cancer. These riders may offer a cash benefit and/or access to value-added services to help assist with daily living.
Pay attention to details
The flexibility of living benefit riders varies by carrier—some offer broader features, while others come with restrictions. They may include optional upgrades that provide more features and benefits. Payouts can be structured as a lump sum, monthly installments or other options, and some policies require a waiting period before benefits become available. Since every policy is different, take the time to explore your options and understand what best fits your needs.
Incorporating living benefits into a life insurance policy can help give you financial flexibility when you need it most. Take time to compare costs, features, terms and conditions to choose the right product for your needs.
Additional reading:
The cost of cancer: Preparing for the unexpected
Life insurance decoded: How health and other factors affect your pricing
