The purpose of life insurance is to provide a financial safety net for your family when tragedy strikes. It is there to reduce the financial burden of tragedy on your family. When a family earner is no longer there to earn or when final medical expenses are high, life insurance ensures that your family can pay the bills, cover a funeral, and can take time to mourn during a tragic situation.
Living Benefits in Life Insurance
Living benefits are life insurance benefits you can use while you are still alive. Not all life insurance policies are built the same way. After all, different people and families have different financial concerns.
Life insurance living benefits make it possible to use life insurance as a financial safety net before the demise of the policyholder. These are often added as “riders” to your policy. They differ from the death benefit, which is the typical final sum provided to beneficiaries after the policyholder’s death.
There are three common types of living benefits that you might add to your life insurance.
Life Insurance Loans
A permanent (no end-date) life insurance policy can act as a savings account. It can even grow with interest and dividends. You can then withdraw some amounts of cash as a loan if your family is ever short on money at a critical time. The amount you withdraw can reduce the death benefit, or you can repay it to maintain your long-term death benefit gains.
• You do not have to pay taxes on life insurance loans if the withdrawn amount is less than your premium payments.
• Life insurance loans offer a lower interest rate than standard loans.
Critical Illness Care
Critical illness care pays for medical treatment services regarding specified illnesses, particularly illnesses that are potentially fatal. This can prevent the financial burden of medical care for a critical illness from falling on your family.
Long-Term Care
Long-term care terms can cover the cost of in-home care or nursing home expenses. These policies are popular with elderly clients who do not want the cost of their final senior care to fall upon their families and want to ensure there will be funds for good quality care in their old age.
How Living Benefits Can Help Families
Of course, what matters most is how living benefits in life insurance can help families. There are many family situations where the right set of living benefits can prevent financial crisis when the money is needed most. In addition to the example we gave at the beginning, where a parent develops a life-threatening health condition, these examples also show how the right ABRs can save a family’s financial future when crisis strikes.
1. Car Accident Survival
A young policyholder is in a car accident and survives. Their critical care life insurance covers the cost of life-saving surgery without leaving them or their family with medical debt. They are able to fully recover and rebuild their death benefit over many more healthy years as a policyholder.
2. A Withdrawal at the Right Time
A mother secures life insurance with ABRs during her first pregnancy. When their home needs emergency repairs, she withdraws some of her life insurance premiums as a temporary loan, and pays it back when the homeowner’s insurance settlement arrives for the repair costs.
3. Independence with Long-Term Care
An elderly policyholder secures a long-term care rider on their life insurance policy. When they begin to need in-home care, the expenses are covered. The senior can live in their own home without asking family to look after them or pay for care.
4. Getting Ahead of Workers’ Comp
A skilled professional gets life insurance with critical illness care. When injured on the job, the critical injury coverage pays for medical bills even before the worker’s compensation settlement is provided. This prevents a financial crisis and allows them to get the best worker’s comp settlement without rushing to a low-ball offer.
Life Insurance Myths
As our examples have highlighted, life insurance isn’t just for the elderly, critically ill, or people in dangerous jobs. Life insurance is often the right answer for young people, and premiums are often less than most people pay for television streaming subscriptions. In fact, your policy will probably be the most affordable if you begin while both young and health, when your risk factors are at their lowest.
People who secure a good permanent life insurance policy at a young age have plenty of time to build up their death benefit, while also creating a “savings account” for medical emergencies and low-interest loans. ABRs make life insurance not just a policy in case of death, but a safety net for your entire life.
Life Insurance Peace of Mind
Life insurance with living benefits provides the greatest peace of mind. While the death benefit can take care of your loved ones financially in the event of your death, living benefits ensure you can spare yourself and your people a financial burden in the event of medical challenges, as well. Critical illness, injury, or the eventual need for long-term care don’t have to weigh on your mind.
You can take care of your household financially in difficult times by ensuring that your life insurance policy is there when you need it all through your life.
Explore Living Benefits Life Insurance
If you are planning for your financial future and the financial security of those you love, consider exploring life insurance options with living benefits. Northeast Nebraska Insurance is here to help you find the right policy for your situation and plans. Contact us to speak with a qualified, independent agent to determine the coverage that best suits your needs.