Term life insurance living benefits

According to Insured Retired Institute, only 23% of those born during the Baby Boomer years believe that their savings is adequate enough to support their lifestyle through the retirement years.  One of the key setbacks that can deplete their precious savings is out of pocket cost to cover medical expenses if a serious illness strikes.  In this article, we will explore this topic and describe how life insurance with living benefits can provide solutions to this problem.

Terminal Illness

Planning for a terminal illness is a very morbid idea and most people would not spend time focusing on tragedy.  However, life insurance without an accelerated benefit rider for terminal illness will not pay the insured until they have lost their battle with that illness.  That fact is morbid.  Why not add a rider that allows the insured to access a large portion of the death benefit while they are still alive?  That money could be used to settle debt and carry-out whatever wishes the insured would like to administer for the survivors while they are still alive.

Here’s how a terminal illness accelerated benefit works.  A doctor tells his patient that he or she has less than 2 years to live.  Using this rider, the insured could choose to access the death benefit in a lump sum to enjoy life to the fullest during those 2 years and spend quality time with loved ones carrying out the wishes in the will in real time.  If the face value of the policy is $100,000, the insured could receive up to $90,000 to do whatever he or she wants to do with that money.

Chronic Illness

The accelerated benefit for chronic illness provides access to the death benefit if the doctor has certified within the last 12 month that the insured is either unable to perform 2 of the six daily living activities without assistance:  dressing, eating, bathing, toileting, transferring or continence for a period of at least 90 days due to a loss of functional capacity or requires substantial help from another person for a period of at least 90 days to protect the insured from threats to health and safety due to severe cognitive impairment

In most cases, the insured could receive this benefit as a monthly payout however they wish depending on the severity of the illness.  This money could offset medical bills or cover services that a long term care policy would cover.

Critical Illness or Injury


The Centers for Disease Control and Prevention, 2012 reported that one person in the US suffers a stroke every 40 seconds.  Heart attack, cancer, renal failure, alzheimer’s disease, Lou Gerig’s disease are a few of the chritical illnesses that the accelerated benefit rider for critical illness will cover.   The rider allows the insured to access the death benefit and receive a lump sum at a specific amount based on the severity of the critical illness or injury.

The accerated payments are optional.  The insured could choose to leave the death benefit uneffected and have the full lump sum paid out to beneficiaries after he or she passes away.

The death benefit will be reduced by the amount of the death benefit the insured decides to accelerate. A discount factor will be applied to the death benefit accelerated because it is being paid prior to the actual death benefit. As a result, the actual benefit paid will be less than the amount of death benefit accelerated.


Is this concept worth further discussion?

If you have parents or loved ones that have suffered a critical or chronic illness, you may have first hand experience dealing with the medical treatment process and all the costs and time associated with helping that loved one recover. In some instances, the illness may not have a cure and the best solution was to reduce pain and suffering and increase their comfort level.  In either case, I’d like to connect and share more details about how accelerated benefits can be applied in a specific illustration.

If so, please leave a comment below

Our office is dedicated to connect with you and conduct a needs analysis for term or permanent life insurance with accelerated living benefits added at no extra cost.





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