How Living Benefits Can Provide Financial Security in Times of Need
Living benefits are a valuable feature in various insurance policies, particularly life insurance, that can provide financial security in times of need. They offer policyholders the opportunity to access a portion of their policy's death benefit while they are still alive under certain circumstances. The primary types of living benefits include accelerated death benefits and critical illness riders. Here's how they can provide living benefits life insurance financial security:
Accelerated Death Benefits:
Terminal Illness: If the policyholder is diagnosed with a terminal illness and has a life expectancy of, for example, 12-24 months, they can access a portion of their policy's death benefit. This money can be used to cover medical expenses, quality-of-life improvements, or other financial needs.
Chronic Illness: Some policies offer benefits for chronic illnesses that prevent the policyholder from performing two or more activities of daily living, such as bathing or dressing. In such cases, the policyholder can access a portion of the death benefit to cover the cost of long-term care or other expenses.
Critical Illness: Critical illness riders may cover specific serious medical conditions like cancer, heart attack, or stroke. If the policyholder is diagnosed with a covered condition, they can receive a lump-sum payment to help cover medical expenses or other financial needs.
Financial Security Benefits:
Peace of Mind: Living benefits provide peace of mind, knowing that if you face a severe medical diagnosis or terminal illness, you have a financial safety net in place.
Reduced Financial Stress: Receiving an accelerated death benefit or a critical illness benefit can help offset the financial impact of medical expenses, treatments, and lifestyle changes, reducing financial stress during challenging times.
Flexible Use of Funds: Policyholders can use the living benefit funds for various purposes, such as covering medical bills, modifying their homes for disability, paying off debt, or taking a dream vacation to improve their quality of life.
Supplemental Coverage:
Living benefits can supplement other insurance or savings. They provide additional financial support, especially when health insurance doesn't cover all expenses, or when disability insurance may not be sufficient.
Tax Advantages:
Worthington Financial Partners, Living benefits are often tax-free, making them an attractive source of funds during times of need, as they won't result in an additional tax burden.
It's important to note that the availability and terms of living benefits can vary depending on the insurance policy and the insurance company. Policyholders should thoroughly review their insurance policies and understand the specific conditions and limitations for accessing living benefits. Additionally, there may be fees associated with accessing these benefits or a reduction in the overall death benefit, so it's crucial to weigh the pros and cons and consider consulting a financial advisor for personalized guidance.