Life Insurance With Living Benefits: A Game-Changer for Your Clients

When most people think about life insurance, they focus on the death benefit—the payout their loved ones receive when they pass away. While this is a critical component, many clients overlook a powerful feature: living benefits. As a financial professional, educating your clients about these benefits can differentiate you in the market and provide them with financial protection during their lifetime.

What Are Living Benefits?

Living benefits are policy provisions that allow policyholders to access a portion of their death benefit while they are still alive under specific circumstances. These typically include:

• Chronic Illness Riders: If a policyholder is unable to perform two out of six activities of daily living (ADLs), such as bathing or dressing, they may qualify for an accelerated benefit.
• Critical Illness Riders: If diagnosed with a qualifying condition—such as cancer, heart attack, or stroke—the insured can access funds to help cover medical expenses or lost income.
• Terminal Illness Riders: If a client is diagnosed with a terminal illness with a life expectancy of 12 to 24 months, they can receive an advance on their death benefit to ease financial burdens.

The Growing Need for Living Benefits

The financial impact of a major illness can be devastating. Consider these statistics:

• The average out-of-pocket cost for cancer treatment in the U.S. is around $6,000 to $10,000 per year, with some treatments exceeding $100,000 annually.
• The average hospital stay for a heart attack costs over $20,000—not including lost wages or rehabilitation.
• A study by the American Journal of Medicine found that 62% of bankruptcies in the U.S. are tied to medical expenses, even among those with health insurance.

For many clients, an unexpected illness can derail their financial future. Traditional health insurance may cover some costs, but out-of-pocket expenses, loss of income, and additional care needs can quickly deplete savings. This is where life insurance with living benefits can provide a financial lifeline.

How Living Benefits Strengthen Your Client’s Financial Plan

1. Income Replacement: If a client can’t work due to a critical illness, accelerated benefits can help cover mortgage payments, bills, or daily expenses.
2. Medical Cost Coverage: Funds can be used to cover deductibles, treatments, or experimental therapies not covered by health insurance.
3. Flexibility: Unlike traditional disability insurance, which often has restrictions, living benefits provide lump-sum payments that can be used at the client’s discretion.
4. Long-Term Care Alternative: Many chronic illness riders function similarly to long-term care insurance, offering clients an additional safety net without a separate policy.

Positioning Living Benefits in Your Client Conversations

When discussing life insurance, shift the conversation from "what happens when you die?" to "how can this help you while you're still alive?" Clients often hesitate to buy life insurance because they don’t see immediate value. But when they realize their policy can help them if they get sick, not just when they pass away, the decision becomes much more compelling.

Final Thoughts: A Must-Have in Every Client's Portfolio

Life insurance with living benefits isn’t just an add-on—it’s a crucial tool for financial security. As a financial professional, positioning these policies effectively can help clients protect their families, preserve their savings, and maintain control of their financial future, even in the face of serious illness.

If you’re not already incorporating living benefits into your conversations, now is the time to start. Your clients—and their families—will thank you for it.