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Living Benefits Life Insurance

Learn About Living Benefits Life Insurance 


What are Living Benefits for Life Insurance?

Living benefits of a life insurance policy are benefits provided to and obtained by those insured, while still alive.

Living death benefits are an early payout of anticipated death benefits from a rider attached to an existing life insurance policy, or from a separate policy.

It’s added coverage to a life insurance policy that allows you access part of your death benefits while you are alive if you meet the requirements which usually include being diagnosed with a terminal illness with less than 6 months to live.


How Much Living Benefits (Accelerated Life Insurance Benefit) Can You Get from a Life Insurance Policy?

The amount of accelerated benefits available from your life insurance will depend on the insurance company and your policy limits. Some carriers may offer from 25% up to 75% of your policy’s death benefit limits.

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Review of Living Benefits Life Insurance Companies


Prudential Life Needs Benefit Rider 

This benefit is available at no additional premium on most of Prudential’s level-term life insurance policies.

It was designed to add flexibility to the payment of specified claims by advancing part of the death benefit if the insured: (a) has been confined to an eligible nursing home for at least 6 months and is expected to be permanently confined; (b) is terminally ill and has a life expectancy of six months or less; or (c) requires an organ transplant and would have only six months or less to live without the transplant procedure.

The Living Needs Benefit is an accelerated payment of life insurance proceeds.

It is not intended or designed to provide health or long-term care insurance. Funds can be sued for any purpose.

Prudential provides options on accelerated benefits for terminal illness and nursing home.


Transamerica Trendsetter LB

This life insurance living benefit can give you early access to the policy’s death benefit, should you experience a qualifying chronic, critical, or terminal illness such as stroke, cancer, heart attack, or paralysis.

Transamerica Trendsetter LB offers face amounts of term life insurance coverage from $25,000 all the way up to $2 million, with up to $1.5 million available for accelerated living benefits.


Purpose of Living Benefits

The purpose is to allow the terminally ill insured an additional source of finance to pay medical bills or other necessities.

There are basically two methods for paying out these benefits:

The policyholder gains access to the benefits when the policyholder contracts an illness that has been diagnosed as terminal with a life expectancy usually of less than two years

The policyholder gains access to the benefits when the policyholder is confined to a nursing home or a long-term care facility and can be expected to remain in this facility until death.


Tax on Living Benefits?

Generally, as long as the policyholder is expected to die within 12 months of the date of the payment of the living death benefit, and that benefit is discounted only by an amount that is consistent with a life expectancy no greater than one year in duration, the beneficiary(s) is not taxed on the life insurance proceeds.


What is Acceleration Life Insurance?

An acceleration life insurance policy makes a portion of the death benefit (usually 25%) payable to the insured for a specified medical condition prior to death.

The purpose of the accelerated death benefit is to provide funds necessary to finance medical treatment costs to extend the life of the insured.

Upon proof of a specific medical condition, the insurance company will pay 25% of the death benefit. When the insured dies, the remainder of the death benefit is paid to the beneficiary, just as under a traditional life insurance policy.


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