Life Insurance with Living Benefits

Life Insurance with Living Benefits

Buying Life Insurance can be brutal.  What policy do I buy?  Who do I buy it from?  How do I know that the policy I am buying is any good?  It’s enough to make your head spin. In this article, we’ll answer these questions and discuss getting life insurance with living benefits.

And a lot of folks, they end up not getting coverage at all.  You don’t have to be a policy genius to figure out that if someone gets really confused about something, they will tend to sit on their hands and do nothing.  Better to have no coverage than to have the wrong coverage.

I never tell a potential client that they should have coverage.  I always ask them first if they have someone they truly care about that they would want in a better position once they are gone.  If they have that person, they should consider very strongly having life insurance with living benefits.

What Are the Living Benefits with Life Insurance?

Life insurance with living benefits

Some life insurance carriers offer living benefits, which is code for you to get money before you pass.  The carriers are very competitive.  They know some folks will need financial assistance before they pass.  As we have often said, you don’t have to be a policy genius to see that the carriers want your business and will bend over backward to get

Living benefits can mean an accelerated death benefit for term or permanent life insurance policy. The benefit is included in the carrier’s policies or added to your policy as a ‘rider’. A rider is a coverage that is purchased separately.  It is then added to the policy you already have.

Dividends are a living benefit of some permanent life insurance policies. Though not guaranteed, these payments to policyholders are based on company profitability. You can have a variety of options to expend dividend payments.

How Does Cash Value Build in Life Insurance with Living Benefits

Living benefits of life insurance

Typically, insurance products like whole life and term insurance policies build some cash value over the policy’s tenure. The policy owner or insured can use this fund to meet their financial goals or supplement their retirement income. 

The Benefits of Building Cash Value:

Although the premiums are higher for life insurance with living benefits, it is worth the prices due to the reasons like:

Facilitates Loan Approvals

When your policy builds cash value, you can use it as collateral to take loans for emergencies, paying tuition, etc. However, don’t forget it is a loan that you need to pay off before passing away. If not, your death benefits will be reduced by the loan amount and outstanding interest. 

Tax-Deferred Payment

If you have a permanent life insurance plan, the accumulated cash value comes with tax-deferred benefits. 

Pay Off the Balances

You can also use this accumulated cash value to clear the balance premiums on your policy. If you have children enrolling for college, use this fund to pay their college tuition. 

Which Companies Sell the Best Insurance with Living Benefits?

Several life insurers offer their life insurance with living benefits as a rider or with level policies. Here, they are:

Northwestern Mutual

The company provides early pay benefits if you are diagnosed with a disease or illness that gives you less than six months of life. Many states do not have this policy, while some policies may be exempt from the early pay benefits. With Northwestern, you can expect up to 50% of your death benefits in your lifetime. 

New York Life

Also called AARP, this company has accelerated care, living benefits rider that offers help if you are temporarily or permanently impaired. The benefits are allowed if you are unable to perform the routine activities of your daily life. You will get half your death benefits with this rider with a limitation of $500,000.

Lincoln Heritage

Lincoln Heritage offers TermAccel policy with a minimum coverage of $100,000. You can buy accelerated benefits with this policy to face an illness that results in your death. If you receive this benefit before expiry, it can be taxable and reduce your chances of getting government assistance. With a one-time charge, you can use this rider.


MetLife has accelerated death benefit rider, which helps cover assisted living expenses or a part-time nurse for a loved one. The insured should be unable to perform necessary tasks like eating, bathing, dressing, walking, and toileting without assistance to qualify for this rider.


The Benefit Access rider from the company gives you 100% of your death benefits upfront if you face a terminal or chronic illness that requires routine treatment. If you sign up at the start and have coverage of at least $100,000, you can avail of this rider with full benefits. 

What Are the Average Rates for Policies with Living Benefits?

The average policy rate may differ according to your risk factors and insurer. The rates may be different for males and females, smokers and non-smokers, as well. Here is a sample of how much you can expect to pay for life insurance with living benefits. 

CompaniesMarket Share
Northwestern Mutual6.42%
New York Life5.68%

Why Should You Buy Accelerated Death Benefit Rider?

The living benefits rider or accelerated death benefits can be paid from your term life insurance while you are alive. The insurer pays a portion of your insurance’s death benefits to cover your treatment or care expenses. The balance goes to your beneficiary after your passing away. 

Conditions When You Can Buy Life Insurance with Living Benefits

Living benefits life insurance

If you want living benefits added to your life insurance policy, you will get coverage in three different areas. The most common life insurance products offering this coverage include:

Chronic Illness

You can buy chronic illness accelerated death benefits as a rider to deal with expenses of diseases like stroke, cancer, and heart diseases. According to CDC reports, these are the costliest health issues in the United States. 

So, if you become chronically ill anytime during the policy term, the company can pay up to 90% of coverage or a maximum of $500,000 to cover your treatments and lost income. 

A licensed physician or healthcare practitioner should verify that you can’t perform at least two out of six everyday activities like eating, moving, continence, bathing, toileting, and dressing.

Critical Illness

Critical illness like stroke, paralysis, heart attack, or lung cancer can make you eligible for living benefits life insurance. Here again, the company will advance or pay up to 90% or $500,000 of your policy’s amount to cover your treatment costs if a licensed physician verifies your illness. 

Terminal Illness

If someone has a severe disease that cuts short their life and a physician suggests that they have less than 12 months left in their lives, the insurer may offer up to 100% of the policy’s face amount. 

This feature comes with most of the life insurance products. So, you can consult your insurance agent to see if you really need it. 

How Can You Get the Best Rates for Life Insurance with Living Benefits?

Living benefits insurance

Since the insurance companies will determine your premium rates according to your risk factors, you should always try to increase your lifespan. Well, for better rates, change your lifestyle a bit, improve your habits, and you’re good to go. Here’s what you can do:

  • Reduce the consumption of sugary beverages and canned or junk food.
  • Stay healthy with regular workouts and better heart health.
  • Limit or quit smoking, chewing tobacco, drug abuse, or alcohol intake.
  • Take more precautions at the workplace and limit risk-taking behaviors and hobbies.

These changes can reduce your insurance premiums, but you should start early to save more. This gives the insurer more time to earn premiums. 

Can You Get Living Benefits with Term Life Insurance?

Many insurance companies offer living benefits rider with their traditional term policies. In case if you have less than two more years to live, you can ask your insurer to pay a portion of your death benefits to cover the medical expenses of your illness. The term policies have certain restrictions and fees that you may have to pay before getting the living benefits.

If it doesn’t provide an accelerated death benefits rider, you can pay extra money to add this rider after understanding the fees and conditions. Even if your policy comes with accelerated death benefits, you can buy a rider to double the coverage. 

What Are the Pros and Cons of Life Insurance with Living Benefits?

When you want to buy life insurance with living benefits or accelerated death benefits, you should determine your lifestyle and health conditions to make the right decision. Since it is a sensitive topic, we suggest you check both pros and cons of living benefits before signing on the dotted lines.


  • It can be included in your policy
  • Offers a portion of death benefits to cover your medical expenses and bills
  • Funds directly go to the insured or the beneficiary if they can prove the illness or disease through a licensed physician


  • If it is not included in the base policy, it becomes an additional cost
  • Your beneficiaries will get lesser money to cover funeral costs after your death
  • The amount is calculated according to your health conditions, not your needs

How Much Will It Cost to Buy Term Life Insurance with Living Benefits?

In most cases, term life insurance with living benefits cost the same as those without this feature. Even if it costs extra, you will pay a small amount of money added to your regular premiums. 

For example, if you buy coverage of $500,000 with a 20-year term, the standard rates may be around $42.23, and if you buy living benefits with this policy, it may go up to $43.60, which is just $1.40 additional per month.

Should You Buy Life Insurance with Living Benefits?

Life insurance with living benefits review

So what do you do? Get yourself covered.

They are absurdly high, considering the struggles of middle and lower-class America.  You are playing into their hands by trusting a credit card to do what normal life insurance coverage should do.

Just imagine, you could get a policy, make a few monthly payments of $35 each, unfortunately, pass away early, and then entire burial is covered with money left over.

Or in the same scenario minus the coverage, you could saddle your family with $50,000 or more of bills when you consider the cost of interest from a credit card. $105 vs. $50,000 … it seems like a simple choice.

Most of us consider the quality of life provided our family to be the most important choice.