Term life insurance is part of your plan for providing financial protection for your loved ones, business or estate. There is not another form of insurance or a financial tool you can use that provides the value you get from term life. It’s inexpensive, simple to maintain and easy to purchase.
However, your family or your business only benefit if you die. And while that’s simply the nature of life insurance, it’s not exactly the most desirable trade off. Wouldn’t it be nice if term life policies offered benefits while you were still living?
Living benefits are exactly what the name implies. They are benefits paid from the term life policy while you are living. More commonly, they are known as accelerated death benefits. With these benefits, the life insurance company pays or advances a portion of the policy’s death benefit to you to pay for care or treatment. The company will then pay the balance of the death benefit to your beneficiary(s) if you were to die.
Limitation to Accelerated Death Benefits
It’s important to understand that there are some limitations you need to understand with these types of benefits.
State Availability – Accelerated death benefits are not available in every state. Many standard term life policies that offer accelerated death benefits are also limited by state restrictions. Let's discuss what your options are when it comes to Living Benefits.
Benefit Limits – Many benefits limit the amount and frequency that you can tap into accelerated benefits. Again, it's important to understand these limits, so let's talk about your options.
Fees – Accelerated death benefits are essentially loans against the policy’s face amount. The company will use a benefit interest rate to determine the present value of future benefits. This rate, along with administrative fees will be factored into the amount of the benefit allowed.
It’s a good idea for you to get an understanding of these benefits before you purchase a policy. You don’t want to wait until a critical illness occurs to learn how your policy works.
Give us a call to determine if this is a good fit for you.