Living Benefits for Life Insurance

There are many types of Living Benefit riders on new life insurance policies.

The most common is the Terminal Illness rider.  A Terminal Illness rider provides for the payment of an accelerated benefit if an eligible insured has an illness or chronic condition that is expected to result in Death Within 24 Months.

The next most common is the Chronic Illness rider. A Chronic Illness rider provides for the payment of an accelerated benefit if an eligible insured is unable to perform two out of six activities of daily living (2 of 6 ADLs) or experiences severe cognitive impairment.

One of the newer living benefit is the Critical Illness rider. This rider provides for the payment of an accelerated benefit if an eligible insured experiences a critical illness. Covered critical illness includes as many as 16 specific illnesses.

Some life insurance policies also have a Long Term Care rider. Although the benefits are payable in a very similar fashion as a Chronic Illness rider - an eligible insured is unable to perform two out of six activities of daily living (2 of 6 ADLs) or experiences severe cognitive impairment - the benefits are often limited to actual costs of long term care while benefits under a Chronic Illness rider can be used for any purpose.

For policy owners that are using their life insurance as a source of tax-free retirement income, another very valuable rider is the Overloan Protection rider. These riders prevent a policy from lapsing and creating a taxable event.

Another living benefit is the Lifetime Income Benefit rider. This rider guarantees the tax-free retirement income will last a lifetime.

We must not forget the Waiver of Premium rider (for whole life and term life), and the Waiver of Monthly Deductions or Waiver of Specified Premium riders (on universal life).

The above generic named riders do not represent any specific policy with any particular insurance company.

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