Life insurance is more than a death benefit. Policies and features have evolved to meet people’s changing needs. Accelerated benefits riders or living benefits provide flexibility, allowing policyholders to use them in both life and death.
What Are Accelerated Benefits Riders?
Accelerated benefits1 are added to an insurance policy in the form of a “rider.” For those facing a critical illness or injury, living benefits can help with medical expenses. Without benefits in place, a medical crisis can be financially devastating.
How Do They Work?
Living benefits may be paid to the insured for the following events:
- Terminal illness diagnosis, with death expected within a specified period
- A catastrophic illness or the need for extraordinary medical intervention
- Long-term care
- Permanent nursing home confinement
The policyholder decides how to spend the benefit. It can be used for anything that makes life more manageable during a difficult time. This may include household expenses, bills, home modifications, nursing care, the mortgage, or even, a family trip.
How Do Living Benefits Affect the Death Benefit?
Living benefits are deducted from the total death benefit amount. Payments are made in monthly installments or as a lump sum. The amount varies by policy, but it’s normally between 50 to 80% of the total benefit. Some, however, can be as much as 100%. If 100% of the death benefit is paid in living benefits, the policy will cease. The insured must continue making premium payments while the living benefits are paid. This keeps the remainder of the policy current.
1Living benefits are not available in every state or in conjunction with every product.