What Are Living Benefits?
Life insurance with living benefits allows policyholders to access a portion of their policy’s death benefit while they are still alive. This feature, often included as an accelerated death benefit rider, gives financial relief to individuals facing chronic illness, critical medical conditions, or other financial hardships.
Unlike traditional life insurance, which pays out to beneficiaries after the policyholder passes away, living benefits provide clients with flexibility. They can use these funds to cover medical expenses, long-term care, or even daily living costs if they receive a diagnosis for a qualifying condition. In many cases, the policy includes this benefit at no extra cost, making it an attractive option for clients seeking comprehensive protection.
Some policies also include specific riders like a chronic illness rider or a critical illness rider. These riders give policyholders the ability to use their death benefit while still alive to cover expenses tied to serious health conditions, allowing clients to manage medical costs more effectively.
Types of Life Insurance with Living Benefits
Different life insurance policies offer living benefits, which enables agents to match coverage to clients’ needs.
- Term Life Insurance – Typically includes optional living benefits riders. These term life policies provide coverage for a set period and are usually the most affordable option, making them ideal for younger clients or those seeking temporary protection.
- Whole Life Insurance – A permanent life insurance policy that offers lifetime coverage, builds cash value, and often includes living benefits. Whole life policies can also serve as financial assets, allowing the policyholder to take out a policy loan if needed.
- Universal Life Insurance – Offers flexibility in premium payments and cash value accumulation while including living benefits, making it a good fit for clients who want adaptable life insurance coverage.
Medical & Financial Advantages
Clients choose life insurance with living benefits because it provides financial security during challenging times.
- Coverage for Chronic and Critical Illnesses – If a policyholder is diagnosed with a chronic illness, critical illness, or terminal illness, they can use their benefit amount to pay for treatments, home healthcare, or even experimental therapies not covered by health insurance. By adding a chronic illness rider or a critical illness rider to the policy, clients gain more control over their healthcare and have financial resources to manage these conditions.
- Support for Long-Term Care – Living benefits help clients cover costs for assisted living, nursing homes, or in-home caregivers, easing the financial burden on loved ones. Clients who struggle with activities of daily living—such as bathing, dressing, or eating—can find these benefits life-changing.
- Income Protection – Self-employed individuals or those unable to work due to medical conditions can use their benefits to maintain financial stability and avoid depleting savings. In some cases, they may also consider an annuity to supplement their income during recovery.
Who Can Benefit from the Living Benefits of Life Insurance?
As an insurance agent, you need to identify clients who will truly benefit from life insurance with living benefits.
- Seniors & Pre-Retirees – Many older clients seek financial protection that includes potential healthcare costs as life expectancy rises.
- Self-Employed Professionals & Business Owners – These individuals often lack employer-provided benefits and need coverage that safeguards their income if illness prevents them from working.
- Clients with a Family History of Illness – Clients at higher risk for conditions like cancer, heart disease, or stroke benefit from knowing they have access to financial resources for medical expenses.
Selling Strategies for Agents
When you present life insurance with living benefits, position it as a must-have feature rather than an optional add-on.
- Highlight Financial Security – Explain how living benefits provide a financial safety net during medical emergencies.
- Use Real-Life Scenarios – Share examples of how policyholders have used living benefits to cover unexpected expenses. For instance, a client diagnosed with a terminal illness can access their benefits to help pay for long-term care services or experimental treatments not covered by health insurance.
- Compare Costs vs. Benefits – Show how the cost of adding living benefits to a policy is minimal compared to the potential out-of-pocket expenses for medical care. In many cases, the accelerated death benefit rider is included at no additional cost, making it an even more attractive option.
Regulatory and Compliance Considerations
You must stay informed about state regulations regarding life insurance with living benefits. Requirements vary, so ensure policies meet the standards set by each life insurance company. Compliance also includes fully disclosing how living benefits work, including any limitations or eligibility requirements.
Additionally, underwriting plays a crucial role in determining eligibility for life insurance coverage with living benefits. Clients with pre-existing medical conditions may have different options depending on the insurer’s underwriting guidelines. You should guide clients through the application process and help them understand how their health history impacts their coverage options.
Working with a financial professional can help ensure clients understand their policy, including details about insurance premiums, benefit amounts, and coverage terms. Being transparent about premium payments, potential payout options, and access to policy funds—such as through a policy loan—builds trust and positions you as a valuable advisor in their financial planning.
Life insurance with living benefits offers clients more than just a policy’s death benefit—it gives them financial security and flexibility during their lifetime. By helping clients understand these advantages, you position yourself as a trusted advisor offering comprehensive solutions.
Want to provide your clients with the best insurance products available? Contact Midwestern Marketing today to explore life insurance plans with living benefits, including options with chronic illness riders and critical illness riders.
Midwestern Marketing is a true FMO where a handshake still means something. We value our agents and take service and contracting to a new level. The teamwork and principles by which we operate are reflected in the thousands of agents we serve nationwide. Feel free to call 877-278-3775 or email us at info@midwesternmarketing.com. We are certain we can help you grow your business!