What Is A Living Benefits Life Insurance Rider?

Having life insurance is the peace of mind every family needs to have. A family member can ensure their dependents do not have to take on their financial burdens and can have enough money to sustain and get their lives in order.

As we progress with new healthcare technologies to sustain our lives during certain critical illnesses, this does increase current medical expenses. Insurance companies have realized this and understand the needs that consumers have for more insurance products and services. That’s why many life insurance plans have an add-on policy called “riders.”

Understanding What a Rider Provides

A rider is an add-on policy to add additional benefits and protection to a life insurance policy. An owner can in essence create the best plan to cover their family’s needs. Some must be requested while others are automatically included. If there is an additional cost, it’s quite low.

What is a Living Benefits Rider?

A Living Benefits Rider (LBR) or Accelerated Payout Rider is an additional benefit that the policy owner can collect while they are living if they have been diagnosed with a terminal illness. It’s meant to help the insured live as comfortable a life as possible until their last day. An owner would have access to the cash value in the event of a chronic illness or terminal illness.

How Can a Living Benefits Rider Help?

Having a critical illness, there are treatments, prescriptions, in-home care, and hospitalization expenses to cover. The insured may not be able to work and help cover mortgage, utility, and other home expenses. The LBR will pay out, and a person can use the money however they see fit. So if they want to take their family on vacation, this is also acceptable.

How Much Can I Get with the Rider?

Every life insurance provider handles their LBR differently. In general, you can expect to receive 25% to 95% of the death benefit. The actual payment will depend upon your policy’s face value, your contract terms, and the state you reside in.

If you were to access your life insurance funds via a policy surrender or a policy loan, you would get approved for funds based on your cash value. The Living Benefits Rider is different in that you will get approved for funds based on your policy’s face value. So in most situations, the LBR will provide you with the most funding.