We understand that this question is really odd. How can life insurance keep you alive?! Well, in this post we will touch on a problem many families are facing and show you how life insurance could make a difference in their lives and help financially, without dying. And no, we are not talking about cash value policies (even though they have many benefits).
We will explain how life insurance with living benefits could be the breath of fresh air many families need.
Prior to jumping in, we wanted to advise you that you can reach out to us if you have any questions or would like us to take a look at your personal situation. You can also review our guide on the basics of shopping for life insurance.
Ok, so what exactly we’re talking about?
Recently, we ran across someone’s story. We believed he was not the only person, going through such a hardship, so we wanted to share and bring awareness to this issue.
Did you know that according to cancer.gov, cancer treatment can be in the upwards of hundreds of thousands of dollars? Unfortunately, that is not the end. Once, chemo and/or radiation is completed, a patient may be required to take certain medications for the rest of his or her life. And this is where the problems lie. These medications can cost $1,000 per month!
For many families having to cover monthly living expenses and the cost of the medication is unbearable. The article goes on to explain the “financial toxicity as a harmful side effect from cancer treatment”. It is financially devastating. People are having to leave their homes, jobs, use up all of their savings just to be able to afford to stay alive.
This does not only apply for conditions such as cancer, people diagnosed with diabetes, heart conditions, stock and etc. could be on the verge of a financial crash due to the cost of treatment.
It is enough to break anyone’s heart. This is where life insurance with living benefits comes into play.
So, what are living benefits in life insurance and how they work?
We’ve answered the most common question we get below. In addition, we’ve dedicated several guides outlining how exactly living benefits work in a life insurance policy and how they differ from cash value policies.
What are living benefits?
Accelerated benefit riders, also referred to as living benefits, it is the option to accelerate or use your life insurance policy while still alive. It is a “modern take” on life insurance. Companies will allow you to file a claim against your death benefit and use the money TODAY vs. waiting for you to die.
Who gets the money?
The accelerated benefit is payable to YOU, oftentimes in a lump sump. You could use the money for anything you need. Some clients need to cover the cost f their medical treatment, while others need help with their mortgage or living expenses. Regardless of how you would need to spend the money, it is there for you.
Do I have to pay the living benefits back?
No, you don’t. Unlike cash value, the proceeds are not considered a loan. You don’t have to repay the money you receive in a form of accelerated benefit.
Should I use my entire policy?
It really depends. First off, every company’s policy on living benefits is different. Some carriers would allow up to 100% of your life insurance policy, while others up to 25%. You need to review your needs and financial situation closely. If you accelerate your entire policy, this means that you are canceling/surrendering your life insurance policy. If you have a severe chronic condition, may be very challenging or impossible to secure a new policy. The options are referred to as partial acceleration and full acceleration.
How much does a rider cost?
With many carriers, there is no cost for the rider. The benefits are built into the policy. However, the payment amount you’ll receive will be reduced by a discount based on your life expectancy and an administrative fee. Typically, the fee to accelerate your policy is $500.
How long you have to file a claim to accelerate your life insurance policy?
Generally, companies allow up to 365 days after the qualifying event to file for policy acceleration. Every company is different, so we encourage you to take a look at your policy for acceleration guidelines.
How long it takes to receive the money?
Once you file all of the necessary forms and the company has received all of the required information, it takes approximately 7-10 business days.
How to secure life insurance with living benefits
The process to secure life insurance with living benefits is exactly the same as buying a policy without this feature. The key is to work with a broker, who has access to companies that offer these riders. In fact, there are many companies that offer life insurance with living benefits that do not require a medical exam.
How can life insurance keep you alive? Through, providing you with financial stability. You can accelerate your death benefit and use the funds to seek alternative treatment, pay your medical bills or the rising cost of required medication. Even though life insurance policy with living benefits is not the answer to all problems, it could be the breath of fresh air a family needs after a devastating event.
If you want to see if you qualify, or learn more about it, simply reach out to us. You can do so by filling the quote form on the site, leave a comment or give us a call.
We hope you find this information helpful and are looking forward to working with you.