Life insurance for the living
Life insurance for the living is about the ability to use your policy benefits prior to keeling over. Most consumers look at life insurance strictly as a death benefit paid to their heirs at the time of death. Which psychologically for many is a hard item to purchase. You die someone else benefits. Today many policies offer living benefits that can be accessed prior to your passing. It has become a great life insurance strategy to incorporate into your financial plan.
Life Insurance for the living
Old school life insurance policies typically offered Whole life or permanent life insurance vs term life insurance. Term life insurance was simple. You buy a policy for anywhere between 10-30 years and if you die in that time frame someone cashes in on your death. Whole life insurance was designed as a policy you potentially kept for life that would build up “cash value” in a sub account an individual could access for any financial need that might arise. Both are pretty boring products that fit the need for some but not the needs of many. As time goes by the insurance carriers started coming up with concepts that made the purchase of life insurance more attractive to the average consumer. Which in turn made life insurance a more powerful financial tool.
Life insurance for the living was created to add benefits into the average policy that the policy holders to could benefit while still kicking. Lets take a look at a few living benefits
- Terminal Illness
Terminally Ill means that the Insured has a medical condition, resulting from bodily injury or disease, or both, which is expected to result in the death of the Insured within 12 months of diagnosis.The condition must be first diagnosed by a Physician on or after the later of the Date of Issue or the Policy Date; and must be demonstrated by clinical, radiological, laboratory or other evidence of the medical condition which is satisfactory to us; and must not be curable by any means available to the medical profession.
- Critical Illness
Critically Ill means that the Insured has been diagnosed with one or more of the following health conditions: heart attack, stroke, cancer, end stage renal failure, major organ transplant, amyotrophic lateral sclerosis, blindness or paralysis.
- Chronic Illness
Chronically Ill means that the Insured is unable to perform, without substantial assistance from another person for a period of at least 90 days, at least two out of the six Activities of Daily Living or requires substantial supervision by another person, for a period of at least 90 consecutive days, to protect the Insured from threats to health and safety due to Severe Cognitive Impairment.
Imagine having access to up to 90% of your death benefit over time to help pay for your living or medical expenses? This would truly take away much of the burden from you and your family financially while you are sick. If you do pass away the remainder of the death benefit is paid to your heirs.
Long Term Care and Life Insurance
Life insurance for the living has introduced a hybrid long term care policy combined with life insurance. This product is typically for older adults who worry about paying for long term care down the road. It is estimated 70% of people over 65 will need some type of long term care assistance. It many cases these policies are paid either by one lump sum or what is called single premium or payed into the policy for 10 years. You can see in the example below that the policy has the traditional death benefit and cash value of the traditional permanent life insurance policy. But on the far right hand column is the the Long term care monthly benefit.
These type of policies are becoming more attractive to life insurance consumers due to the fact that if they never use the long term care benefit their heirs will receive the total death benefit. Where traditional long term care policies is the benefit is not used the money is spent. As you can see these type of policies also grow in cash value to potentially also help with other financial needs that arise.
As long-term care costs continue to rise, long-term care insurance has not become widespread. Long-term care insurance is expensive, while most people do not want to pay premiums for something they might not need in the future. A hybrid product has the benefit of combining two products into a single policy. If you never use the long-term care insurance, you can still benefit from the life insurance.