The short answer
Living benefits are provisions, usually called riders, that let the insured person receive part of the death benefit early if they are diagnosed with a qualifying condition. They are also called accelerated death benefits.
They are not included in every policy, and they do not cover every illness. Each rider spells out exactly what qualifies.
The three common types
Terminal illness. Typically available when a physician certifies a limited life expectancy, often 12 or 24 months, as the rider defines it.
Chronic illness. Typically tied to being unable to perform a certain number of daily activities, such as bathing or dressing, or to severe cognitive impairment.
Critical illness. Typically tied to a listed event such as a heart attack, stroke or certain cancers. The list and the definitions are set by the carrier.
How a payment works
If a claim is approved, the carrier pays part of the death benefit early. Many riders apply a fee or a discount, so the amount received can be less than the amount by which the death benefit is reduced.
Whatever is paid early comes out of what the beneficiaries would later receive. A living benefit is an advance on the policy, not extra money on top of it.
What they are not
Living benefits are not health insurance, disability insurance or long-term care insurance. They do not pay medical bills directly, and they are not a replacement for any of those kinds of coverage.
Cost and availability
Some policies include certain riders with no added premium, with a charge applied only if the rider is used. Others offer riders for an added premium. Some policies do not offer them at all. Availability also varies by state.
Questions worth asking
Which conditions qualify, and how is each one defined? How much of the death benefit can be accelerated? What fee or discount applies? Is there a waiting period? Could a payment affect taxes or eligibility for public benefits? The last question is one for a tax or benefits professional.
Product availability varies by state and carrier. All coverage is subject to carrier underwriting and approval; features, premiums, exclusions and riders depend on the specific policy. This article is general education, not a recommendation for your situation. DNA Life & Legacy and its agents do not give tax or legal advice. Please consult your own tax or legal professional about your situation.