07 May Life insurance can help while you’re still alive.
Life insurance can help while you’re still alive. Learn how living benefits work—and why they matter.
When most people hear the words life insurance, they assume it only comes into play after someone passes away. But did you know that many modern policies offer benefits you can use while you’re still living?
These are called living benefits, and they’re a game-changing feature of life insurance that too many people overlook. In this article, we’ll break down what they are, how they work, and why you should consider life insurance with living benefits as part of your financial plan.
What Are Life Insurance Living Benefits?
Living benefits are optional features (also known as riders) included in many life insurance policies that allow you to access a portion of your policy’s death benefit while you’re still alive—under specific circumstances.
Instead of waiting until a claim is made after death, living benefits let you tap into your coverage if you’re diagnosed with a critical, chronic, or terminal illness, or if you face certain long-term care needs.
This turns your life insurance policy into a flexible financial resource while you’re still here to use it.
Common Types of Living Benefits Riders
Living benefits are often built into or added onto both term and permanent life insurance policies. Here are the most common:
1. Critical Illness Rider
If you’re diagnosed with a major illness such as cancer, stroke, or a heart attack, a critical illness rider allows you to receive a portion of your death benefit to cover treatment, travel, or lost income.
2. Chronic Illness Rider
A chronic illness rider can provide access to funds if you become unable to perform two or more of the six activities of daily living (ADLs), such as bathing, eating, or dressing. This can help cover long-term care expenses, home modifications, or nursing support.
3. Terminal Illness Rider
If a physician diagnoses you with a terminal illness and your life expectancy is 12 to 24 months or less (varies by policy), this rider allows you to access a significant portion of your policy’s death benefit early—to cover medical bills, final wishes, or family support.
These riders are often included at no additional cost on many policies from modern life insurance providers.
Real-Life Examples: How Living Benefits Make a Difference
Example 1: Critical Illness Coverage
Sarah, a 45-year-old mother of two, was diagnosed with breast cancer. Thankfully, her life insurance policy included a critical illness rider. She received $75,000 from her death benefit to cover treatment and take time off work for recovery—without dipping into her retirement savings.
Example 2: Chronic Illness Rider in Action
Mark, age 68, began to experience mobility issues and could no longer perform basic daily activities. His chronic illness rider kicked in, providing monthly payouts that covered part-time in-home care and reduced the financial pressure on his family.
Example 3: Terminal Illness Peace of Mind
Angela, a 59-year-old policyholder, was diagnosed with a terminal illness. Through her terminal illness rider, she accessed 80% of her death benefit early, giving her peace of mind and the ability to arrange final affairs on her own terms.
Do Term and Permanent Policies Both Offer Living Benefits?
Yes—though the availability and structure can vary.
Term life insurance: Many providers now include living benefits as part of standard term policies. You’ll want to confirm which riders are included and what qualifies for a claim.
Permanent life insurance (like Whole Life or Indexed Universal Life): These policies often offer even more flexible rider options, and in some cases, access to cash value can serve as an additional living benefit.
To see how these options compare, check out our life insurance with living benefits page.
How to Claim Living Benefits
The process for claiming living benefits varies by insurer but generally follows these steps:
Diagnosis or eligibility event (e.g., cancer, stroke, ADL inability, terminal diagnosis)
Documentation submission, usually involving a physician’s statement and medical records
Policy review and claim approval
Advance payout from your death benefit (usually a lump sum or structured amount)
Note: Accessing living benefits will reduce the remaining death benefit available to your beneficiaries.
Why Living Benefits Matter More Today Than Ever
Between rising healthcare costs and longer life expectancies, the ability to use your life insurance policy before death is becoming essential. It gives families more control, more choices, and more peace of mind during uncertain times.
Think of it as built-in financial resilience.
Ask The Policy Shop About Policies With Powerful Living Benefits
Whether you’re shopping for term coverage or exploring a permanent life policy with cash value, it’s worth asking:
“Does this policy include living benefits?”
The answer could mean the difference between financial hardship and financial relief in a time of crisis.
📞 Ask The Policy Shop which of their policies offer powerful living benefits tailored to your needs.
FAQs: Living Benefits in Life Insurance
What are living benefits?
Living benefits allow you to access part of your life insurance payout while you’re still alive due to a qualifying critical, chronic, or terminal illness.
Do term and permanent both offer them?
Yes, but coverage types and availability can vary. Some term policies include basic living benefits, while permanent policies may offer broader options.
How do I claim them?
You’ll need to provide proof of diagnosis or illness, meet your insurer’s criteria, and submit a claim for review and approval.
Final Thought
Life insurance isn’t just about protecting your family when you’re gone. With the right policy, it can protect you while you’re still here.
Explore life insurance living benefits today—because peace of mind shouldn’t have to wait.
Ready to learn more? Connect with The Policy Shop and get matched with coverage that supports you through life’s most challenging seasons.