Life insurance is designed to protect your family’s financial well-being after you die, but financial stress may hit as soon as health problems and medical bills begin to mount. Many life insurance policies can be tailored to help with these costs that precede the insured’s death. To do so, consider adding the following benefits to your life insurance policy.
Accelerated benefits allow you to access from 50 percent to 90 percent of your insurance payout — also known as a death benefit — to deal with the financial stress of a terminal illness. For example, if you’re diagnosed with advanced cancer or another qualifying disease, you may access this benefit. For some people, this could help them avoid bankruptcy and stay afloat while they struggle with illness.
Even if you don’t have a terminal illness, living benefits allow you to access 25 percent to 50 percent of your death benefit early if chronic or critical illnesses cause financial hardship. A heart attack can lead to massive medical debt, made worse by missing work for an extended period of time. A life insurance policy with living benefits can pay cash immediately to replace your lost income and help with bills.
A life settlement is a third option for getting immediate access to emergency funds. This involves selling your current life insurance policy to a third party that will pay you a lump sum (10 percent to 50 percent of policy value) right away in exchange for the entirety of your eventual death benefit. This means your beneficiaries will receive nothing after you pass, however, so proceed carefully with this option.
Because life insurance policies don’t always include accelerated or living benefits, you may need to add this coverage with “riders” that bolster your policy.
– Written by Matt Forrest