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While life insurance is designed to benefit your loved ones after you pass away, it also helps them and you before that time comes by way of something known as living benefits.<\/p>\nWhile life insurance is designed to benefit your loved ones after you pass away, it also helps them and you before that time comes by way of something known as living benefits.<\/p>\n
Living benefit options for term life include:<\/i><\/b><\/p>\n
Accelerated death benefits:<\/b>\u00a0This benefit pays out a portion of your term life policy if you ever face a terminal illness and gives you needed cash to cover any medical, debt, or other expenses. A variation on this option is called a critical illness rider that lets you access your death benefit if a specific ailment or disease afflicts you.<\/p>\n
Return of premium:<\/b>\u00a0This benefit provides for all the premiums you paid during the term to be returned to you so long as you don’t pass away during the term.<\/p>\n
Disability waiver of premium:<\/b>\u00a0This benefit lets you skip your premium payments in the event you suffer from a long-term disability lasting six months or more. While not a true cash benefit, it’s still a valuable option.<\/p>\n
Living benefit options for permanent life include:<\/i><\/b><\/p>\n
Death benefits:<\/b> This insurance offers similar benefits as term life insurance but includes an additional ability to accumulate cash value on a tax-deferred basis.<\/p>\n
Cash value withdrawal:<\/b>\u00a0This benefit provides you access to a portion of the cash value of your permanent life policy. There are tax implications to be aware of depending on the amount withdrawn, and the amount withdrawn will be subtracted from the policy’s death benefit if not repaid.<\/p>\n
Policy loan:<\/b>\u00a0You’ll be charged interest if you take out a loan against your permanent life policy, but it’s usually lower than the interest charged by more traditional lenders.<\/p>\n
Long-term care benefits:<\/b>\u00a0Adding a long-term care benefit to your permanent life policy lets you tap into the death benefit to cover long-term care expenses that your health insurance doesn’t cover. It’s a valuable living benefit to have when you consider that 70% of people turning 65 today will need some form of long-term care in their lives.<\/p>\n