Term Life Insurance With Living Benefits: Protecting Yourself & Your Loved Ones in [2026]
The traditional view of term life insurance is that it is a “death benefit.” It is a financial safety net that only catches
your family if you are no longer there to catch them yourself.
For years, this was the only option. You paid your premiums, and if you lived past the term, the policy ended.
When you die, your beneficiaries receive a check. It was black and white. But what happens if something falls in the gray area?
What happens if you don’t die prematurely, but you get devastatingly sick? What happens if you have a heart attack, but it leaves you unable to work for two years?
What happens if a cancer diagnosis drains your life savings on experimental treatments not covered by health insurance? Keep in mind that living benefits are paid out in a lump sum and not in bits and pieces.
Conventional Term Policies Offer (No Benefits) for an Illness!
In those scenarios, a traditional “death benefit” policy is useless to you. You are sitting on hundreds of thousands of dollars of coverage, financial ruin is staring you in the face, but you cannot access a dime because you are still breathing.
These are modern term life insurance policies that are feature-rich and designed for the realities of modern medicine. We survive illnesses today that would have killed us twenty years ago. Your insurance policy needs to reflect that reality.
This policy package provides death benefit protection alongside substantial benefits for Critical Illness, Chronic Illness and Terminal Illness. And the most shocking part? These incredibly valuable policies offer many more benefits than a bare-bones, traditional term policy.
Despite their immense value, most consumers have never heard of them. Why not? Because they take a little more effort to explain. Many agents would rather sell you the simplest product quickly and move on. At Best Choice Life Insurance, we believe an educated client is the best client. We want you to understand that you can protect your life while you are still living it.
What Are “Living Benefits” in Simple Terminology?
A Living Benefit Term Policy is like having that spare tire, but it also includes roadside assistance, engine repair coverage, and emergency towing. It covers you for breakdowns that happen while the car is still running.
In technical terms, living benefits are often called “Accelerated Death Benefits” (ADRs). This means the insurance company allows you to “accelerate”—or access early—a portion of your policy’s death benefit while you are still alive if you meet specific medical criteria.
If you have a $500,000 term policy with living benefits, and you suffer a major medical event, you might be able to access, for example, $300,000 of that total immediately. You receive that money as a lump sum check.
You Can Spend Your Money However You Want
You don’t have to spend it on hospital bills. You can use it to pay your mortgage while you are out of work recovering. You can use it to fly in a specialist from across the country. You can use it to modify your home for wheelchair access, or take a final dream vacation with your family. The insurance company does not dictate how you use the funds. It’s your equity to use when you need it most.
A Quick Story:
A number of years ago, a client of mine wanted to buy life insurance and she decided on a living benefit policy with a $500.00 face amount from Transamerica. She was 34 years old and chose a term period of 20-years but had not applied yet. She went to the doctors for a checkup due to the fact she was not feeling well.
To make the story short, it was found that she had developed breast cancer which she fought for over 14 years and then died. The policy would have trigged the critical illness benefit which would have immediately paid out $375,000 out of the $500,000 death benefit.This would have been great for covering everyday expenses while being out of work.
She went on for her last remaining 14 years with no life insurance at all due to her cancer diagnoses.
The Three Pillars of Protection: Defining the Illnesses
The key to understanding these policies—and feeling confident enough to buy one—is knowing what triggers a claim. Living benefits are generally grouped into three distinct categories.
To ensure you never feel confused about what you are buying, let’s clearly define the difference between a critical illness and a chronic illness.
1. Critical Illness Benefits
Critical Illness is generally defined as a sudden, severe, and acute health event. It’s a specific medical diagnosis that hits you hard and fast.
While every insurance carrier has slightly different definitions, the most common triggers for a Critical Illness claim include:
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Invasive Cancer
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Heart Attack (Myocardial Infarction)
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Stroke
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Major Organ Transplant
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Kidney Failure (End-Stage Renal Disease)
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Severe Burns
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Paralysis
If you are diagnosed with one of these conditions, you file a claim with the carrier. They review your medical records to confirm that the diagnosis meets their policy definition. Once approved, they will calculate your offer and send you a check.
2. Chronic Illness Benefits
This is where many people get confused, but it is perhaps the most valuable feature for long-term planning. Unlike a sudden heart attack, a chronic illness is a condition that permanently affects your ability to care for yourself.
You generally qualify to access your living benefits for Chronic Illness if a licensed physician certifies that you are unable to perform at least two of the six Activities of Daily Living (ADLs) for a period of at least 90 days, without substantial assistance.
The six ADLs are universally recognized in the medical and insurance fields:
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Bathing: The ability to wash oneself in a tub or shower.
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Continence: The ability to control bowel and bladder function.
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Dressing: The ability to put on and take off all items of clothing and necessary braces or artificial limbs.
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Eating: The ability to feed oneself by getting food into the body.
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Toileting: The ability to get to and from the toilet, get on and off, and perform associated personal hygiene.
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Transferring: The ability to move from one bed, chair, or wheelchair to another.
Alternatively, a Chronic Illness claim can also be triggered by Severe Cognitive Impairment. This covers conditions like Alzheimer’s disease or irreversible dementia, where constant supervision is necessary to protect the insured person from threats to their own health and safety.
3. Terminal Illness Benefits
This is the most straightforward benefit. If you are diagnosed with a terminal illness and a physician certifies that you have a life expectancy of usually 12 months or less (sometimes 24 months depending on the state and carrier), you can access almost all of your death benefit immediately.
This allows you to settle your affairs, pay for hospice care comfortably, or spend quality remaining time with your loved ones without financial stress.
The Unbeatable Value of Living Benefits
Now that you understand what these policies cover, let’s talk about value.
As I mentioned earlier, these policies often cost only about 15% more than a basic policy. Let’s look at a hypothetical example of what that means in real dollars.
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Client: A 40-year-old male in good health looking for a 20-year term policy.
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Basic Policy – $500,000 Death Benefit only. Premium: -$35 per month.
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Living Benefit Policy – $: $500,000 Death Benefit + Critical, Chronic, and Terminal Illness riders included. Premium: -$41 per month.
For approximately an extra $6 a month—the price of a fancy coffee—this client gains access to a potential pool of up to $500,000 while they are alive.
If that client suffers a severe stroke at age 50, the basic policy pays him nothing. He may lose his job, drain his savings, and face foreclosure while recovering.
With a Living Benefit policy, he could potentially access hundreds of thousands of dollars tax-free to save his home and finance his recovery.
The value proposition is undeniable. It is, in my professional opinion, the most sensible way to buy term life insurance in today’s world.
Q&A: Common Questions About Living Benefits
In my 30 years of experience, I have heard every question in the book. Here are the most common ones regarding living benefits.
Q: If I use the living benefits, what happens when I eventually die?
A: This is important. Living benefits are an acceleration of the death benefit, not an addition to it. If you have a $500,000 policy and you accelerate $300,000 for a critical illness, your remaining death benefit will be reduced. When you pass away, your beneficiaries would receive the remaining balance (minus some administrative costs, depending on the carrier). You are essentially using your own life insurance money early.
Q: Is the money I receive taxable?
A: Generally speaking, life insurance proceeds—even accelerated ones—are received free of income tax. However, there are some exceptions and gray areas depending on the size of the policy and current tax laws. While these are usually tax-free, we always recommend consulting a tax professional regarding your specific situation.
Q: Why doesn’t every agent offer these?
A: Two reasons: lack of knowledge and laziness. Many agents simply don’t understand how these riders work and fear confusing the client. Others just want the fastest sale possible, which is usually the absolute cheapest, stripped-down quote they can find online. At Best Choice Life Insurance, we take the long view on your financial health.
Q: How hard is it to file a claim?
A: It is not difficult, but it requires documentation. You cannot just call up and say you feel sick. You will need an attending physician statement and medical records confirming your specific diagnosis (Critical) or your inability to perform ADLs (Chronic). Carriers want to pay valid claims, but they must verify them first.
Recommended Insurance Carriers Offering Living Benefits
Not all life insurance companies offer these “feature-rich” packaged policies. Some offer only terminal illness, while others offer weak definitions of critical illness.
With over three decades in the business, I know which carriers walk the walk. We advise our clients toward highly-rated, financially stable companies with strong histories of paying claims. While we shop the entire market for you, here are examples of the types of top-tier carriers we often recommend for living benefits:
(Note: Specific plan details change frequently. We will always provide current illustrations at the time of application.)
Corebridge Financial (Formerly AIG Life & Retirement)
Corebridge is a powerhouse in the living benefits space. Their “Quality of Life” suite of term products is phenomenal. They offer robust definitions for critical, chronic, and terminal illnesses that are built right into the policy premiums. They are known for offering flexibility in how much of the benefit you want to accelerate, depending on the severity of your illness.
North American Company for Life and Health Insurance
North American is another highly rated carrier that packages these benefits beautifully. Their “ADDvantage Term” life insurance includes accelerated death benefits for critical, chronic, and terminal illnesses for no additional premium cost at issue. They are particularly strong in their clear definitions of chronic illness triggers.
Transamerica
Transamerica’s “Trendsetter LB” (Living Benefits) series is highly competitive price-wise. They offer excellent term options that allow access to benefits for qualifying critical, chronic, or terminal illnesses. They are often a great choice for clients who want maximum living benefit features while keeping their monthly premiums as low as possible.
How to Apply: The “SnapApp” System
If you agree that paying a small fraction more for significantly more coverage makes sense, your next question is likely, “How do I get this?”
Many people dread applying for life insurance because they imagine 30-page paper applications and invasive medical exams.
At Best Choice Life Insurance, we have modernized the process with our “SnapApp” telephone application system.
It’s incredibly simple:
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We offer a brief initial consultation to determine how much coverage you need.
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We can schedule a 15-20 minute telephone appointment.
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An interviewer will ask you the application questions over the phone.
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You can sign the application digitally via email.
That’s it. In many cases, for healthy individuals under a certain age and coverage amount, we may even be able to waive the medical exam entirely.
In Conclusion
Don’t settle for old-fashioned life insurance that only works if you die. Modern medicine has changed the game, and
your insurance policy needs to keep up.
For just pennies more on the dollar, you can secure a policy with Living Benefits that protects your lifestyle, your assets, and your family while you are still here to see it.
With over 30 years of experience, we always make sure our clients understand what they are buying and that they get the best value for their money. Don’t let confusion stop you from getting the best protection available.
All the best,
Jack Venturi
Watch our YouTube video if you have about 3 minutes.
What Is Term Life Insurance With Living Benefits? + YouTube Video
