IMOR Financial - Are Living Benefits in Life Insurance Worth It?

The IMOR Financial Blog


Are Living Benefits in Life Insurance Worth It?

The answer is yes, Living Benefits are worth it. It gives you and your family financial flexibility when you may need it the most. You utilize the death benefit before death, while you are still alive.

Research from the American Society of Clinical Oncology finds that treatment could cost $20,000 to 30,000 a year. This is about half of the average U.S. household income. There is also a 70% chance that the average 65 year-old will need long term care services, according to the U.S. Department of Health and Human Services.

What are life insurance benefits?

What exactly are life insurance living benefits you may ask? Living benefits allow the insured to access money from the policy’s death benefits while they are still alive. The money can be used to pay for expenses such as terminal or chronic illness, for example, nursing home, in-home caretakers, medical care, hospice care, and more. Keep in mind, by having access to these benefits, it reduces the death benefit available to your beneficiaries when you die. 

Most people purchase life insurance so that their loved ones have the benefit of financial security when they die. No one likes to think that a serious illness could happen to them, but it is pretty common. For example, 40% of people will be diagnosed with cancer in their lifetime. 

Defining terminal, chronic, and critical illness

Terminal illness is categorized by if you have been diagnosed with having six months to two years (this timeline on the insurance carrier) to live. In this case, you may use the rider to cover end of life care and other expenses associated with this. Most times, this rider is automatically included in the life insurance policy without any extra cost, but make sure you check with the carrier.

Chronic illness is categorized by if you are diagnosed with a chronic illness that keeps you from carrying out two of the six activities of daily living (ADL’s), bathing, getting dressed, eating, toileting, transferring, and continence. 

Critical illness is categorized by if you have access to living benefits if diagnosed with a critical illness that shortens your expectancy and has high medical costs. Some examples include heart attack, kidney failure, stroke.

Having access to these benefits in life insurance may be received as a lump sum or on an as-needed basis. A claim will need to be submitted to the insurance company along with medical records and other documents. You are limited in how much you can draw out to a certain percentage or the dollar amount of the life insurance policy’s death benefit.

Make sure you ask your agent/broker about your options when looking for the life insurance policy that makes sense for you, your family and loved ones. Not all life insurance automatically include living benefits.

If you are interested in learning more about which life insurance option is right for you please email Vickie at This email address is being protected from spambots. You need JavaScript enabled to view it. or call at 717-790-2171.


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