LIVING BENEFITS EXPLAINED
What is Living Benefits Life Insurance?
Living Benefits life insurance is the new life insurance you do not have to pass away to use.
It puts the “Life Back into Life Insurance”
The American Cancer Society says that 1 in 3 Americans (33.3%) will develop cancer in their lifetime.
The National Institute of Aging states Americans over 65 will have a 70% chance of needing long term care.
1 in 3 Americans will develop cancer in their lifetime
Men 39.3% chance of developing cancer in their lifetime
Women 37.7% chance of developing cancer in their lifetime
Overall, Americans have 70% chance of needing long term care over 65 years old.
With no government programs to help middle class families weather extended healthcare costs, the financial burden is left to the individual.
Being able to have available cash on hand is critical for someone who is ill, but with saving for retirement, paying for high housing costs, and saving for college, families’ finances are stretched thin. That’s where a living benefits life insurance policy comes in.
Life Insurance with living benefits includes a death benefit, but the advantage is that your life insurance can actually subsidize your income and pay for medical expenses if you become sick with a major illness.
Living benefits works by advancing your life insurance death benefits early as a lump sum of cash. The money can be used for anything such as mortgage payments, school tuition, medical expenses, or family bills.
Here’s how it works.
If you develop any one of three major conditions:
1. a critical life threatening illness,
2. a chronic long term illness where you need help for daily activities
3. or a terminal illness, you would be eligible for early benefits.
Let’s provide more details.
A critical life threatening illness dramatically affects your life and includes some of these conditions:
Lou Gehrig’s Disease or ALS
Heart Bypass Surgery
A chronic long term illness is not a specific disease, but an inability to independently conduct two of six activities of daily living without help. Chronic illnesses can be the result of cognitive impairment such as from Alzheimer’s Disease or from a physical disability as a result of a stroke or paralysis.
The activities of daily living include: bathing, eating, dressing, transferring, toileting, or continence,
Eligible clients can accelerate their life insurance benefits and receive payments to hire help, replace income, or keep up with family bills.
The last qualifying condition that activates the living benefits is a terminal diagnoses where life expectancy is less than 24 months.
Here is an example of Sam who experienced a critical life threatening illness:
Sam is 45 and has a heart attack. He will have heart bypass surgery, but as he recovers from surgery he will be unable to work for several months.
Fortunately, Sam has a $1,000,000 life insurance policy with living benefits.
He needs $250,000 in cash right now to replace his lost income, pay for medical expenses, keep up with the family’s monthly bills, and make his mortgage payments.
Sam files a claim with his insurance company to advance his benefits using the critical illness condition.
After his insurance company accepts his claim, Sam decides to accelerate $500,000 of his $1 million dollar policy.
Since he is receiving benefits today versus when he passes away, Sam receives a discount rate of 50 cents per dollar.
($1,000,000 - $500,000) x 50% = $250,000
(Death Benefit - Future Death Benefit) x Discount rate = Lump Sum of cash today
Three weeks later, Sam receives a check for $250,000 and still has $500,000 left of future death benefits that he can use for another illness or leave for his family when he passes away.
Living Benefits life insurance is comprehensive life insurance that provides liquid money
to your family in the event you suffer a major illness and cannot work, preserving your hard earned assets for retirement or your children.
It puts the “Life back in life insurance”