What are the Living Benefits of Life Insurance?

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    Most people think the benefits of life insurance only occur after someone passes away, but many policies also carry benefits that can be utilized throughout the policyholder’s life. In fact, your policy may include cash options you aren’t aware of that can provide financial assistance or relief.

    In this in-depth overview, we’ll help you understand what the living benefits of life insurance are so you can take advantage of the financial options available to you or your loved ones.


    Life Insurance with Living Benefits Explained

    Life insurance is typically associated with death benefits, in which loved ones or designated others receive money from the life insurance policy upon someone passing away. However, some life insurance policies also include living benefits that allow the policyholder to utilize this money while they’re still alive.

    For example, the New York Times ran a story about a 38-year-old sculptor named Patricia North who faced a heart-rendering issue requiring a bone-marrow transplant. Her health insurer spent weeks trying to decide whether they’d pay for the $150,000 procedure, but Ms. North needed financial help immediately. 

    Rather than wait for a decision, Ms. North utilized a living benefits rider within her life insurance policy to obtain an early payout of $190,000. The money from the living benefits of Ms. North’s life insurance policy financed her care and enabled her husband to stay with her during recovery.

    Are you aware of the potential living benefits of your life insurance policy? Contact Harbor Life Settlements to learn about the financial options available to you or your loved ones. Our team will help you understand the benefits of your life insurance policy, which may include living benefits. Don’t delay, contact us today and find out the benefits of your life insurance policy!


    What is an Insurance Rider?

    A rider is an optional provision added onto some insurance policies that amends the terms of the basic policy to include additional benefits, such as the ability to receive an accelerated payout prior to death. A policy may include multiple insurance riders, and each comes at an additional cost that raises the premium. Furthermore, insurance riders may also be known as insurance endorsements, and they can cover home and auto policies in addition to life insurance.

    Some people have unique needs or circumstances that aren’t covered by standard insurance policies, so insurance riders allow them to customize their policies to meet those needs.


    What is an Accelerated Benefit Rider?

    One of the most common types of insurance riders is an accelerated benefit rider, which may also be known as a living benefit rider. An accelerated benefit rider allows you to access money from your death benefit in order to assist you with expenses while you’re still alive. 

    Typically, accelerated benefit riders are used to help people who are living with a severe illness or are faced with qualifying circumstances that prevent the policyholder from taking care of themself. 

    Types of accelerated benefit riders include:

    • Terminal illness accelerated death benefit rider
    • Critical-illness rider
    • Chronic illness rider
    • Long-term care (LTC) rider

    Do you have questions about your insurance policy such as if it includes a rider? Contact us to get a detailed understanding of your policy and the living benefits that may be available.

    Learn about your benefits


    What Are the Living Benefits from Cash Value Life Insurance Policies?

    Riders aren’t the only way people can receive living benefits from a life insurance policy. Insurance riders subtract money from your death benefit so you can use it in life, but some policies allow you to instead use the “cash value” you’ve built up without decreasing the death benefit payout after passing away. 

    This type of policy is known as a cash value policy, which is a permanent life insurance policy that provides coverage for the policyholder’s life. Cash value policy premiums are typically higher than standard life insurance policies because they include living benefits such as:

    Guaranteed tax-deferred growth

    The cash value of a permanent life insurance policy grows tax-deferred at a pre-set amount every year, meaning it is guaranteed to grow a specific amount and will never decline in value. This stable and consistent growth appeals to many people because it helps establish financial security over the policyholder’s lifetime.

    Collateral for loans

    You can use the cash value you accumulate as an asset, meaning it can be used as collateral to borrow money for loans that may cover things such as purchasing a home, investing in a business, or handling an emergency. 

    Flexible funds for retirement

    A permanent life insurance policy also enables you to supplement our retirement income without the limitations or penalties that apply to other retirement fund options such as a 401(k) or IRA. Your policy provides you with several options, such as receiving cash dividends or taking policy loans to provide a steady stream of income.


    Learn About the Living Benefits of Your Life Insurance Policy Today

    Don’t get stuck in the legal lingo or fine print while trying to decipher the benefits of your life insurance policy. Contact Harbor Life Settlements to get expert guidance through the ins-and-outs of your policy. Our team will help you determine if your life insurance policy includes living benefits along with a detailed, but easy to understand explanation of the financial options available to you.

    Contact us to get started today!

    Avery Logan

    Avery Logan

    Avery Logan is a content consultant for Harbor Life Settlements with expertise on a range of health and finance related subjects. When Avery's not cranking out content, he can be found at the nearest dog park or movie theater.

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