Understanding Term Life Insurance With Living Benefits: A Comprehensive Guide for [2024]
Term life insurance is the most commonly sold life insurance product with no close second. The concept is
very straightforward, you pay the premium, and if you die, the policy pays out its death benefit to your beneficiary.
As a result, term life insurance products are cost-effective and practical for most people that need life insurance coverage.
When you look at a term policy, they all have the same mission within their plan design; you die, it pays. But did you know that you could get a term life insurance policy with additional benefits while you are alive for no additional premium?
These policies don’t just have a death benefit, they also have extensive benefits for people who are alive as well. These plans are called term life insurance with living benefits. They are packed with many other benefits if you are diagnosed with many chronic and critical illnesses.
These plan designs possess much more value for your money than a cookie-cutter term policy. Keep reading, and you will see why these plans make much more sense than just purchasing essential term policies.
North American and American National Life build these benefits into their policies at no additional cost.
Table of Contents
Living Benefits: Explained
Living benefits are substantial benefits you can use when you are alive.
As with any conventional term life insurance policy, you have one major benefit: your death benefit. If you die by accident or even natural causes, your insurance company pays out the amount that is stated in your life insurance contract.
When this happens, your policy meets its obligation, and the policy then cancels. If you purchase term insurance with living benefits, you have much more than just a simple death benefit.
There would also be benefits if you were diagnosed with a critical illness that is usually life-threatening. You also benefit from chronic illnesses, which could drastically affect your quality of life and overall health for years to come.
A Look at Living Benefits in Detail
Let me first say that several life insurance companies offer term life insurance policies with living benefits.
The living benefit concept has been around for several years, but most agents don’t want to spend the time to learn about these excellent products.
This also means that life insurance consumers never get a chance to know this product exists, much less how much value they have over conventional term insurance.
We normally use the North American Life Insurance Company or American National Life for all our clients due to their excellent benefits and competitive rates.
For this blog post, we will stick with North American to keep it simple since they usually have the most comprehensive benefits and the lowest rates.
What Are “Critical Illness” Benefits?
Critical illnesses are serious medical events that could take your life. A physician must provide written certification that the insured has incurred one of these specified medical conditions.
Please remember that the owner must file a claim within 12 months of being diagnosed with one of these medical conditions.
Examples of Critical Illnesses?
1. Heart Attack:
A heart attack is defined as the death of heart muscle due to inadequate blood supply that has resulted in
evidence of myocardial infarction.
These infarctions are based on the typical rise and gradual fall of Troponin and other biochemical markers of Myocardial Necrosis with at least one of the following:
a. Typical clinical symptoms (chest pain may or may not be present);
b. Characteristic electrocardiogram (ECG or EKG) changes; or
c. Coronary artery intervention.
2. Cancer:
Cancer is defined as any malignant tumor positively diagnosed with histological confirmation and characterized by the uncontrolled growth of malignant cells and tissue invasion. The term malignant tumor includes leukemia, lymphoma, and sarcoma.
*Types of cancer that may not be covered:
These types of cancer would typically not be life-threatening and are relatively simple to eliminate.
- Non-Invasive
- Premalignant
- Having borderline malignancy
- Has low malignancy potential
- Non-malignant skin cancer
3. Stroke:
The medical profession refers to a stroke as a cerebrovascular accident defined as a definite diagnosis of an acute cerebrovascular event. Strokes are caused by intra-cranial thrombosis, hemorrhage, or embolism with an acute onset of new neurological symptoms.
There are new objective neurological issues upon a clinical examination, persisting for at least 96 hours following the diagnosis of the date. Diagnostic imaging testing must corroborate these new symptoms.
4. Major Organ Transplants:
Major organ transplants are defined as the recipient of a transplant of bone marrow or a whole heart, kidney, liver, lung, or pancreas or inclusion formally on the United Network of Organ Sharing (UNOS) waiting list.
5. Kidney Failure:
Kidney failures are defined as chronic and end-stage renal failure (failure of both kidneys to function effectively) diagnosed and managed by a nephrologist, because of which regular dialysis is necessary.
Most people consider life insurance as a product that will protect their families financial future. Living benefits can help the insured while he or she is alive.
What Are “Chronic Illness” Benefits?
Coverage for chronic illness allows the owner to accelerate a part of the face amount when the insured is diagnosed with a chronic illness, as defined below.
What Qualifies for Chronic Illness Benefits:
A physician must provide written certification that the insured has been chronically ill within the last 12 months. The insured are considered chronically ill if they:
A. Are unable to perform at least two activities of daily living (ADLs) without substantial assistance from another person for at least 90 days; or
B. Require substantial supervision by another person to protect oneself from threats to health and safety due to severe cognitive impairment.
C. If they cannot perform activities of daily living including bathing, continence, dressing, eating, toileting, and transferring. These activities of daily living are those basic human functional abilities that measure the insured’s ability for self-care, to live independently without substantial assistance from another person, as described below 1-6.
1. Bathing: the ability to wash oneself by sponge bath or in either a tub or shower, including the task of getting into or out of the tub or shower;
2. Continence: the ability to maintain control of bowel and bladder function; or, when unable to maintain control of bowel or bladder function, the ability to perform associated personal hygiene and also including and caring for a catheter or a colostomy bag.
3. Dressing: the ability to wear and remove all clothing items and any necessary braces, fasteners, or artificial limbs.
4. Eating: the ability to feed oneself by getting food into the body from a receptacle (such as a plate, cup, or table) or by a feeding tube or intravenously;
5. Toileting: the ability to get to and from the toilet, get on and off the toilet, and perform associated personal hygiene; and
6. Transferring: the ability to move in or out of a bed, chair, or wheelchair.
What is Severe Cognitive Impairment?
Severe Cognitive Impairment is defined as deterioration or loss of intellectual capacity that is measured by clinical evidence and standardized tests, which can measure impairment in:
1. Short-term or long-term memory loss
2. Orientation of people, places, or time
3. Deductive or abstract reasoning
4. Judgment as it relates to insured safety awareness
Examples of Chronic Illnesses
An individual could develop one of these illnesses and live a disabled life for many years.
1. Emphysema
2. COPD
3. ALS (Lou Gehrig’s Disease)
4. Multiple Sclerosis
5. Parkinson’s Disease
6. Rheumatoid Arthritis
7. Cystic Fibrosis
8. Cerebral Palsy
9. Alzheimer’s Disease
10. Muscular Dystrophy
What Are Accelerated Death Benefits?
An accelerated death benefit could be paid out, if so, chosen by the insured if a physician determined you could die within six months to a year.
The maximum amount could be as high as 90% of the face amount up to $1,000,000, depending on what your face amount is for your specific policy.
Accelerated Death Benefit Riders:
Keep in mind that these riders are not optional. They are built into these policies!
Terminal Illness:
For use, if an eligible insured is diagnosed with an illness or chronic condition that is expected to result in death within 12 to 24 months, depending on the state definitions. Each state may be different.
Chronic Illness:
For use, if an eligible insured cannot perform two out of six activities of daily living such as bathing, continence, dressing, eating, toileting, or transferring or has a severe cognitive impairment.
Critical Illness:
For use, if an eligible insured experiences a critical illness described by the rider after the issue date.
How Can I Compare Rates for Living Benefit Policies?
Comparing the rates for these companies is a snap. All you have to do is complete the form on the right to activate our quoting system and look for these companies: North American Life Insurance and American National Life Insurance. You will also find Transamerica Trendsetter LB policies in our quoting system which also works very well.
There are no living benefit riders to add on to these policies. These living benefits are totally built into their plan designs. You can also use our instant life insurance quoting form as an option.
Term Life Insurance With Living Benefits: YouTube Video
Our Final Thoughts
There you have it; modern term life insurance with living benefits policies cannot even be compared to a standard term life insurance policy.
There is much more value in these policies; the significant part is you can use these great benefits while you are still alive.
It is basically like having multiple policies simultaneously but only paying for one. I know you have questions about these plan designs, so don’t hesitate to contact us 7 days a week.
All the best,
Jack Venturi
Should you have any questions or need further assistance, please don’t hesitate to call us at 815-390-7545 for a quick response.
