What You Need To Know About Living Benefits Of Life Insurance

As we always say, it is important for an individual who has a family that depends on them to acquire life insurance. You may have a good understanding of the benefits of life insurance, like how it can help your loved one financially in the event of your loss. Apart from this, did you know how life insurance can protect you while you’re still living? 

Yes! Aside from giving financial assistance to your beneficiary if you left them behind, life insurance also provides a living benefit for the policyholder. This feature enables the policy owner to access a portion of his death benefit while the policyholder is still alive.

What is Living Benefit?

Living benefits also refer as cash benefits can be accessed by the owner after they have their premiums over a specific period or number of years. When buying life insurance, the coverage allows the holder to build cash value through its policy that accumulates over your lifetime. It is considered a living benefit because differs from a death benefit that pays out when you pass away, you use the money you can get while you’re still alive.

The living benefit you can access will depend on a policy to will buy. Whole or permanent life insurance may offer more expensive premiums than a term life which covers a specific length of time because long-term coverage accumulates cash value or tax-deferred basis, which a term policy does not.

Here’s a good look at the difference of whole between term life insurance when it comes to living benefits.

Whole Life Insurance - Living Benefit

The whole policy allows you to access funds all through your life if you needed in four important ways:

• Cash value withdrawal. A cash value withdrawal lets you access a portion of the cash value through your permanent coverage. You won’t owe any taxes on this type of withdrawal if the amount you withdraw is not higher than your monthly payments or equal. However, taxes enter if you choose to withdraw from the interest, dividends, or capital gains. On an important note, the amount you withdraw will be subtracted from the death benefit of your policy if it’s not returned.
• Policy loan. Of course, it’s a loan, you’ll be charged interest if you take out a loan against your coverage, but it is normally has a lower interest, unlike the other lenders.
• Policy surrender. A policy surrender is when you decide to cancel your coverage to access the cash value portion as a one-time lump sum. Your insurance provider will give the amount, minus the outstanding loans and/or unpaid premiums.
• Long-term care benefits. Long-term care benefit is a care you receive when you need it later in life. Adding LTC benefit to your whole life policy lets the policyholder tap into death benefit to cover long-term care expenses that normally your health insurance doesn’t cover. 

Term-Life Insurance - Living Benefit

For term coverage which covers a specific period, living benefits may a lot differ from the whole policy.

• Accelerated death benefits. Term life living benefit allows you to access a portion of your policy if you are ever diagnosed with certain illnesses. This will help you cover medical expenses, debt, and more. Some people used the funds to trip on a dream vacation or make good memories with their loved ones. 
• Return of premiums. A living benefit that pays and returned all the premiums you paid as long as you don’t pass away during the term. Normally, this kind of policy pays more than a traditional term policy.
• Disability waiver of premium. While other living benefits involve cash, this benefit gives you the opportunity to skip your monthly premiums payments in the event you suffer from a long-term disability for six months or more. 

Although there are some features that make them different from each other, they also have similarities such as provide a death benefit for the people you left behind.

A licensed insurance agent or broker can help you extend and explore all your options about living benefits. They can also answer your questions about the policy you want to take. Regardless of what policy you decide to purchase make sure you are well-aware of its components. 

Thank You For Reading!