By Boyce F. Lowery, CLU, ChFC
Do you remember when telephones were attached to the wall by a cord and only served one purpose – calling people? It really wasn’t that long ago. The first call made by a handheld mobile phone was made on April 3, 1973. Cell phones didn’t get “smart” until 1992, and smart phones have barely been around for over a decade. You don’t really realize how much telephones have changed in such a short period until you try to explain a phone booth to a child.
The device that once served only one purpose is barely even recognizable. Today’s phones don’t just call people, they are cameras, computers, navigation systems, music players, text messaging devices, alarm clocks, and video cameras that read your fingerprints and recognize your face.
Telephones aren’t the only old classics that have become multifunctional. Life insurance policies have, too. They just haven’t gotten the same kind of attention that phones have. Gone are the days when life insurance policies were only about paying death benefits. Many modern policies now offer living benefits as well.
Life Insurance with Living Benefits
What are living benefits? As it sounds, living benefits are received while the policyholder is still alive. Just like you don’t have to make a call to use a modern cell phone, you don’t have to die to benefit from a life insurance policy with living benefits. Here are some living benefits that are available with some modern life insurance policies:
Chronic Illness Rider/Long-Term Care Rider
If you develop a chronic illness and are unable to care for yourself, it can be expensive to receive the care you need for an extended period of time. A Chronic Illness Rider or Long-Term Care Rider will take money out of your death benefit to partially or fully cover the cost of your long-term care expenses including home health care, assisted living, adult day care or nursing home care.
Terminal Illness Rider/Accelerated Death Benefit Rider
If you are diagnosed with a terminal illness, this rider will kick in to help cover your medical costs in your last days. In some instances, health insurance won’t pay for experimental care and this could be a source to allow that care to be pursued if desired. The life policy starts paying your death benefit early so that you can avoid leaving your family with a pile of medical debt to pay off after you’re gone.
Critical Illness Rider
Not all catastrophic illnesses are chronic or terminal, but they can still wreak havoc on your finances. The Critical Illness Rider is for those illnesses that you are expected to recover from but still qualify as a serious health crisis. A critical illness rider will pay out a lump sum from your death benefit that you can use to cover your medical costs or to cover lost wages.
Disability Income Rider
If you get disabled and can’t work, your life insurance policy with this rider can help replace your lost income. A Disability Income Rider functions a lot like a long-term disability insurance policy, except that it’s bundled as a part of your life insurance.
Other Living Benefits
You can also customize your life insurance policy to include other living benefits. Additional benefits that are available cover the costs of medical bills, deductibles, copayments, and experimental procedures.
The Need for Living Benefits
A chronic, terminal, or critical illness is sure to generate expensive medical bills. Not only does a serious illness increase your expenses, it may rob you of a livable income as well if you cannot work during recovery or prior to succumbing. This leads to debt, so it isn’t any wonder that 60% of US bankruptcies are the result of a critical illness and related medical expenses.
Owning a life insurance policy with living benefits will protect you in case you die but also in case you don’t. It can mean the difference between just surviving an illness and being able to have a financially viable life afterward.
So, what does your life insurance policy do? If it only pays a death benefit, you could be setting yourself up for unnecessary financial struggles while you’re still alive. Is it time to trade your flip phone for an iPhone X? Take some time today to make sure you have all of your protections in place before you actually need them. Call us at 888-827-0146 for a complimentary review of your current life insurance policy or for help building a personalized policy with the living benefits that you need.
Boyce Lowery is a 40-year veteran and established expert in the insurance industry. As the managing partner of Suncrest Advisors, he, his partner, and their associates all aim to provide financial security and peace of mind to business owners, executives and professionals, and high net worth individuals across the United States. Along with more than four decades of experience, Boyce is a Chartered Life Underwriter® (the premier designation for insurance professionals signifying specialized knowledge in life insurance and estate planning) and a Chartered Financial Consultant® (known as the advanced financial planning designation). To learn more, visit http://suncrestadvisors.com/ or connect with Boyce on LinkedIn.