Life insurance protection for a specified period, with certain policies offering living-benefit features.
INTRODUCTION
Term life insurance generally provides life insurance protection for a specified period of time.
It can be useful when you have significant financial responsibilities that need protection, such as raising children, paying a mortgage, replacing income, funding education, or managing other household obligations.
Certain term life insurance policies may also offer living-benefit or accelerated-death-benefit features that can allow you to access a portion of the death benefit while you are still living if specific qualifying conditions are met.
WHY TERM LIFE INSURANCE?
Term life insurance can provide straightforward protection during the years when your financial responsibilities may be greatest.
It may help protect:
Family income
Mortgage obligations
Education goals
Household expenses
Outstanding debts
Other financial responsibilities
Term life insurance generally does not build cash value in the same way permanent life insurance does.
The purpose is primarily protection for a defined period.
LIVING BENEFITS
One important feature of certain life insurance policies is the potential to access a portion of the death benefit while you are still living if you experience a qualifying medical condition.
These features are commonly referred to as living benefits or accelerated death benefits.
The exact benefits, qualifying conditions, amount available, and requirements depend on the specific policy and rider.
HOW LIVING BENEFITS CAN PROVIDE ACCESS WHILE YOU'RE ALIVE
Serious illness can create financial pressure at a time when your focus should be on your health and recovery.
Depending on the policy, certain living-benefit provisions may allow an eligible policyholder to accelerate a portion of the death benefit while still living.
The money may potentially be used for needs such as medical expenses, caregiving, household expenses, mortgage payments, or replacing lost income, subject to the policy terms and applicable requirements.
These benefits are not automatic. The policy must include the applicable provision or rider, and the insured must meet the policy's definition and qualifying requirements.
TERMINAL ILLNESS
Terminal illness benefits may apply when an insured person is diagnosed with a qualifying terminal illness as defined by the policy.
If the policy requirements are satisfied, a portion of the death benefit may be accelerated and paid while the insured is living.
The policy determines the definition of terminal illness, the required medical certification, the amount available, and other conditions.
CHRONIC ILLNESS
Chronic illness benefits may apply when an insured person meets the policy's definition of chronic illness.
Depending on the policy, this may involve being unable to perform a specified number of activities of daily living, such as bathing, dressing, eating, transferring, toileting, or maintaining continence, or experiencing certain cognitive impairments.
The specific definition and requirements vary by policy.
CRITICAL ILLNESS
Some life insurance policies or riders may provide benefits when the insured experiences a specified critical illness or medical event.
Depending on the policy, qualifying conditions may include certain types of cancer, heart attack, stroke, or other serious medical conditions specifically listed in the policy.
Not every policy covers the same conditions, and definitions and requirements vary.
HOW MUCH COULD BE ACCESSED?
The amount available depends on the policy, rider, qualifying condition, and other factors.
Some policies may allow access to a substantial portion of the eligible death benefit. In certain policies, the amount may be as much as 90% of the eligible death benefit under specific qualifying conditions.
Other policies may provide a lower percentage or a specific dollar amount.
For example, if a $500,000 policy allowed a 90% acceleration and all requirements were satisfied, the potential accelerated amount could be up to $450,000.
The actual amount available is determined by the policy and may be affected by policy provisions, outstanding loans, fees, benefit calculations, and other factors.
WHAT HAPPENS TO THE DEATH BENEFIT?
Living benefits are generally an acceleration of the death benefit rather than additional money added to the policy.
Accessing a portion of the death benefit generally reduces the amount that remains available to beneficiaries.
$500,000 original death benefit
↓
$450,000 accelerated while living
↓
$50,000 remaining death benefit
The actual calculation will depend on the policy and the circumstances surrounding the benefit.
WHO MIGHT CONSIDER TERM LIFE INSURANCE?
Term life insurance may be worth exploring if you:
Have young children or dependents
Have a household that depends on one or two incomes
Have a mortgage or significant financial obligations
Want protection during specific working years
Want to help protect your family's financial stability if you die unexpectedly
QUESTIONS TO CONSIDER
Before choosing coverage, consider:
How much life insurance protection does my family need?
How long should the coverage last?
Who depends on my income?
What financial obligations would remain if I died?
Does the policy include living-benefit features?
What illnesses or conditions qualify?
How much of the death benefit could potentially be accessed?
What would remain for my beneficiaries after an accelerated benefit?
PROTECTION SHOULD HAVE A PURPOSE.
Understanding your options can help you make a more informed decision about protecting the people and responsibilities that matter most.
PAGE-SPECIFIC DISCLOSURE
Certain life insurance policies may provide accelerated death benefits or living-benefit riders for qualifying conditions. Availability, qualifying conditions, benefit amounts, limitations, costs, and requirements vary by policy, carrier, state, and individual circumstances. Accessing an accelerated benefit may reduce the remaining death benefit and may have other financial or tax consequences. Review the actual policy and applicable rider for complete details.
STANDARD WEBSITE DISCLOSURE
The information provided on this website is for general educational purposes only and is not individualized financial, investment, insurance, tax, legal, or financial-aid advice.
Product features, benefits, costs, risks, availability, eligibility, contractual provisions, and requirements vary by product, insurance carrier, state, and individual circumstances.
Nothing on this website guarantees coverage, approval, performance, or a particular outcome. Any decision regarding insurance or financial products should be based on your individual circumstances and a review of the applicable contract and disclosures. Consider consulting qualified financial, tax, legal, or insurance professionals as appropriate.
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