Can You Use Life Insurance While Alive? Understanding Living Benefits
Many people think of life insurance as something that only matters after death. While that was true in the past, modern policies have evolved to offer valuable options that can be used while you're still alive. These features are known as living benefits, and they provide financial support in the event of serious health challenges or other qualifying circumstances.
Can You Use Life Insurance While You're Alive?
Yes, you can. Life insurance with living benefits allows policyholders to access a portion of the death benefit while they are still living. This access typically becomes available if the insured person is diagnosed with a critical, chronic, or terminal illness. The funds can be used for any purpose, whether it’s covering medical bills, replacing lost income, or paying for home care services.
What Qualifies as a Living Benefit Event?
Each insurance provider may have slightly different rules, but living benefits are generally triggered by one of the following situations:
- Critical Illness: If you're diagnosed with a serious health condition such as cancer, heart attack, stroke, or kidney failure, you may be eligible to claim part of your policy’s death benefit.
- Chronic Illness: If you can no longer perform at least two daily living activities (like eating, bathing, or dressing) or suffer cognitive impairment such as Alzheimer’s, you may qualify.
- Terminal Illness: If a medical professional determines that you have a life expectancy of 12 to 24 months or less, depending on the policy, you can access funds early.
How the Process Works
When a qualifying event occurs, you submit a claim to your insurance provider. After reviewing your medical documentation, the insurer determines how much of your policy’s death benefit can be paid out early. This amount varies by policy and condition. Whatever is used through living benefits is subtracted from the final death benefit your beneficiaries will receive after your passing.
What Can You Use Living Benefits For?
One of the main advantages of living benefits is flexibility. There are no restrictions on how you use the funds. People often apply them toward:
- Out-of-pocket medical expenses
- Mortgage or rent payments
- In-home caregiving or nursing support
- Transportation to medical facilities
- Modifying a home to accommodate mobility needs
- Everyday living expenses when income is disrupted
Why It Matters
Serious illness can create immediate financial pressure. Health insurance doesn’t always cover every cost, and taking time off work can reduce your household income. Living benefits help fill that financial gap without requiring you to dip into savings, rely on family, or accumulate debt.
They also bring peace of mind. Knowing you can access part of your life insurance while alive means one less thing to worry about during a difficult time.
Who Should Consider Life Insurance with Living Benefits?
- Families with limited savings who may struggle to handle a major medical event
- Self-employed individuals who don’t have short-term disability or critical illness insurance
- Anyone concerned about long-term care costs or who has a family history of chronic illness
Living benefits are included in many life insurance policies today, often at no additional cost. If you're shopping for coverage, be sure to ask specifically whether living benefits are included and what types of events they cover.
Final Thought
Yes, you can use life insurance while you're alive—and it can make a significant difference. Living benefits provide real-world value when it matters most. They give you access to your policy’s value when you're facing some of life’s hardest challenges. If you're considering life insurance, don’t just think about the future—think about how your policy can support you now. Look for a plan that includes living benefits and speak with an agent who understands how to match you with the right policy for your needs.