Life insurance is primarily designed to pay out deaths to beneficiaries. But some life insurances also provide policyholders with living benefits. The following are three types of life insurance policies.
Accelerated Death Benefits
Most life insurance policies include a provision called Accelerated Death Benefit (ADB). This enables the policyholder to receive a portion of the life insurance money while he or she is still living under certain circumstances. In general, the ADB provision applies when the policyholder has been diagnosed with a fatal disease and has a life expectancy of a certain period of time (six months to two years, depending on the insurance). Some disabilities can also qualify a person, without the requirement of life expectancy. Although it varies from policy to policy, the amounts for accelerated death benefits usually range from 50% to 80% of the insurance value.
In most cases, no restrictions are introduced on how computer resources can be used. The policyholder can use this money to cover experimental treatments, medications or hospital bills. Some people use the funds to pay off a mortgage or support their family's future. Others use them for living expenses or vacations.
Any person with life insurance and fatal illness may qualify for Accelerated Death Benefits. Depending on policies and state laws, people with organ failure who are not candidates for transplants, people who need artificial life support and people with amyotrophic lateral sclerosis (ALS) may also qualify.
Long-Term Care Benefits
Long-term care benefits are another life benefit that is usually available with some permanent life insurance policies. Long-term care (LTC) makes it possible for the policyholder to receive part of the death benefit while he is still alive to cover the costs of long-term care.
The qualifications are different for LTC and ADB benefits. A chronic illness that prevents the person from performing daily activities, such as eating, swimming or dressing, can trigger an LTC rider. Examples are cancer, Alzheimer's, Crohn's disease, epilepsy and MS (multiple sclerosis). ADB requires diagnosis of terminal disease.
Insurance loans are also called life insurance loans. Life insurance companies issue loans to policyholders with the cash value of a life insurance as security. Traditionally, interest rates on policy loans have been very low, but this is no longer always the case.
Insurance companies only provide loans on permanent, full or universal life insurance that have accumulated cash value. Borrowers have various options for repayment, including periodic loan payments or to pay only the annual interest on the loan. Should the borrower fail to repay the loan, the insurance company would withdraw the payment from the insurance's death benefit.
Life insurance is primarily intended to reimburse income when a provider dies. But it is also a vehicle for investment and property planning, and it has living benefits that can be achieved while the person is still alive. Meet our knowledgeable agent for answers to any life insurance questions you may have.