What is a Living Benefits Rider on a Life Insurance Policy?

It’s true that accidents happen every day. But, what about those unexpected life-altering illnesses? They happen every day, too, and you never expect them to happen to you or one of your family members.

So, let’s say you go in for a routine exam and your doctor finds something abnormal and wants to run a few tests. Those tests turn into more tests, and after days or even weeks, you get a terminal diagnosis; like cancer, a tumor, or a rare blood disease.

Treatments will be costly. But, what’s even more costly is that you need to leave your job, either permanently or temporarily, to get those life-saving treatments. How will this change your life? Will you be able to afford your home? Will you be able to afford your car or your other bills? Will you be able to start paying for your treatments even while you’re still being treated?

Most people don’t consider that this could ever happen to them to begin with, so what do people do when they find themselves in a financial bind due to a terminal illness?

The Living Benefits Rider

Many whole life or universal life insurance policies contain what’s called a living benefits rider. This is a very important part of the document since it allows the insured to draw on some of the benefits if they become very ill or develop a chronic disease. However, most term life insurance policies do not include a living benefits rider. 

For those who are concerned about developing a chronic or serious illness, it may be worth taking the time to look for term life insurance that does include these benefits.

How do Living Benefits Riders Work?

A living benefits rider, sometimes called an accelerated benefits rider, is designed to provide you with financial assistance if you become terminally, critically, or chronically ill. However, it’s important to note that not all living benefits riders offer the same benefits. 

That’s why when gathering life insurance quotes, Naperville residents will want to make certain they understand exactly what the rider does. Otherwise, you may think you have specific benefits or access to funds in certain situations when in actuality you do not.

If the insured party suffers from a qualifying illness or condition, the death benefits can be accelerated—i.e., they may be paid out immediately rather than waiting until the person dies. This way, the money can be used to cover various medical costs. A spouse with term life insurance may also be eligible for accelerated benefits payout if they have a rider on their policy.

Specific Riders

There are three different types of accelerated benefits riders:

Terminal illness – this rider pays benefits if the insured has an illness that will result in death in 12-24 months. The minimum policy must be at least $25,000.

Chronic illness – this rider will only accelerate funds if the person is unable to do two of the six different daily living activities (eating, dressing, bathing, continence, toileting, and transferring) or has become cognitively impaired. The minimum policy amount for this rider is $50,000.

Critical illness – this rider accelerates funds in the event of a critical illness, which is defined in the rider itself. The policy must be for at least $50,000 to take advantage of this rider.

Is a Benefits Rider Policy Right for You?

An illness can happen at any time no matter what your current situation is. Isn’t it better to be prepared for the “what if” than struggle to support yourself and your family in the event of an unfortunate situation? If you answered yes, then a living benefits rider policy is right for you!

Want to learn more about policies with a living benefits rider? Contact us today to learn more!

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