What is Term Life Insurance with Living Benefits?

Term life insurance with living benefits is a temporary life insurance policy (for a specific period, e.g., 10, 20, or 30 years) that, in addition to the traditional death benefit, allows the policyholder to access part of the coverage while still alive under certain qualifying conditions policies that only pay out after death, this insurance provides financial support during serious health crises.

How It Works?

It functions like a traditional term life policy but includes additional riders (known as living benefits riders) that allow early access to a portion of the death benefit if the insured experiences a qualifying health condition. Common covered scenarios include:

• Terminal Illness: If diagnosed with a terminal illness (typically with a life expectancy of 12-24 months), the policyholder can access up to 100% of the death benefit.

• Chronic Illness: If the insured is unable to perform two out of six daily living activities (such as bathing, dressing, or eating) due to a chronic condition, a portion of the benefit can be advanced.

• Critical Illness: If diagnosed with a serious health condition such as cancer, heart attack, or stroke, the policy may pay out a percentage of the coverage while the insured is still alive.

Any amount taken in advance is deducted from the death benefit to ensure remaining coverage for beneficiaries.

Key Benefits

• Financial Protection While Alive: Provides funds for medical expenses, income replacement, or debt repayment if facing a serious health issue.

• Affordable Cost: More budget-friendly than permanent insurance while still offering valuable living benefits.

• Family Security: Even after using part of the living benefits, the remaining coverage supports beneficiaries.

• Flexibility and Peace of Mind: Riders for terminal, chronic, and critical illnesses can be included in the policy, sometimes at no additional cost.

Practical Example

Maria has a $500,000 term life insurance policy with living benefits. At age 45, she is diagnosed with advanced cancer. Since her policy includes critical illness benefits, she applies for an early payout and receives $300,000 while still alive. She uses the money to cover treatment and personal expenses. The remaining $200,000 will be available to her beneficiaries when she passes away.

In contrast, a traditional term policy without living benefits would not have provided any financial assistance during her illness.

Comparison with Other Life Insurance Options

Who Should Consider This Type of Insurance?

• Young families seeking maximum protection at an affordable cost.

• Individuals with a history of critical illness in the family.

• Those without significant savings or emergency funds to cover unexpected medical costs.

• People aged 20-50 who want affordable coverage with added flexibility.

• Anyone looking for a balance between financial protection in case of death and financial support during life-threatening conditions.