Insurance you can use while living
Life insurance with living benefits in Long Beach, CA
Living benefits let you use part of your life insurance while you’re still alive if a doctor certifies a terminal, chronic or critical illness. We compare the riders from several carriers so you know exactly what you’d get, what it costs and what it does to your family’s payout.
The short answer
Living benefits in 4 points
- 1A living benefit is an early payout of your own death benefit, usually through an accelerated death benefit rider.
- 2It’s triggered by a qualifying diagnosis, not by need. A doctor has to certify it.
- 3Whatever you take early is subtracted from what your family receives later.
- 4Rules, caps and fees differ by carrier, which is why comparing matters.
The riders
Types of living benefits, in plain English
“Living benefits” is a family of riders. Most are versions of the accelerated death benefit. Here’s what triggers each one and the question we always ask the carrier.
Terminal illness
A diagnosis that limits life expectancy to a period set by the policy, commonly 12 or 24 months.
Ask: Is it 12 or 24 months? What share of the death benefit can I take?
Chronic illness
You can’t do 2 of the 6 activities of daily living (eating, bathing, dressing, toileting, transferring, continence), or have severe cognitive impairment.
Ask: Does it have to be permanent? Is there a yearly payout cap?
Critical illness
A covered diagnosis such as a heart attack, stroke, cancer or kidney failure. It doesn’t have to be terminal.
Ask: Which conditions are on the list, and how is “severity” defined?
Long-term care
You need qualifying care at home, in assisted living or in a nursing home. Usually paid monthly.
Ask: What’s the monthly maximum, the elimination period, and the extra premium?
Waiver of premium
You become totally disabled, often for at least 6 months. The carrier pays your premiums.
Ask: How is disability defined, and to what age does it last?
Return of premium (term)
You outlive the term. Some or all premiums come back.
Ask: How much more does it cost than plain term?
Worked example
Maria, 52: a $500,000 policy and a chronic illness
Maria owns a $500,000 policy with a chronic illness rider. At 52, after a stroke, she can no longer bathe or dress on her own, and her doctor certifies it.
- 1She files a claim with her doctor’s certification. The carrier reviews it and confirms she qualifies.
- 2She chooses to accelerate $120,000 this year to cover in-home care and replace lost income.
- 3Her policy now pays her family about $380,000 later, less any discount or fee the carrier applies.
Hypothetical figures for illustration only. Many carriers discount an accelerated payment or charge an administrative fee, and most cap how much you can take each year and in total. Your policy’s rider sets the actual numbers.
Where Maria’s $500,000 goes
$120k
Used while living (24%)
$380k
Left for her family (76%)
Her other options, compared
| Option | Needs a diagnosis? | Catch |
|---|---|---|
| Living benefit | Yes | Reduces the death benefit |
| Policy loan | No (cash value policies) | Interest grows; can lapse the policy |
| Surrender | No | Coverage ends; possible taxes and surrender charges |
Choosing a policy
Term, whole or indexed universal life?
Living benefit riders are available on all three types, but they do different jobs. Term gets them only through riders. Permanent policies add cash value you can borrow against.
Term life
Most coverage per dollar
- ✓Covers 10, 20 or 30 years
- ✓No cash value
- ✓Good for a mortgage and young kids
- ✓Many term policies can convert to permanent later
Whole life
Guarantees and stability
- ✓Lifetime coverage, level premiums
- ✓Guaranteed cash value growth
- ✓Some policies pay dividends (not guaranteed)
- ✓Costs the most per dollar of coverage
Indexed universal life
Flexible, with growth potential
- ✓Lifetime coverage, flexible premiums
- ✓Interest credited based on an index, with a floor and a cap
- ✓Can supplement tax-free retirement income
- ✓Needs funding and yearly reviews
If you ever need it
How a living benefit claim works
- 1Call us first. We pull your policy and check which rider fits your diagnosis.
- 2Get the doctor’s certification. The carrier sends a claim form your physician completes.
- 3Review the offer. The carrier shows the amount, any discount or fee, and the new death benefit.
- 4Choose how much to take. You don’t have to take the maximum.
- 5Plan for taxes and benefits. Talk to your tax professional, and ask before applying for Medi-Cal or SSI.
The honest trade-offs
- It’s your death benefit, early. Every dollar you take now is a dollar less for your beneficiaries.
- Some riders cost nothing until used. Others add premium. Long-term care riders usually cost extra.
- Taxes. Terminal illness payments are generally excluded from federal income tax. Chronic illness payments may be excluded up to IRS limits (IRS Publication 525). Confirm with your tax professional.
- Public benefits. A lump sum can affect eligibility for needs-based programs.
- Not every state or policy. Riders and definitions vary by carrier and state, so the details are in your contract.
Before you buy
8 questions to ask any agent
- ✓Which living benefit riders are included, and which cost extra?
- ✓Is the terminal illness window 12 or 24 months?
- ✓Does the chronic illness rider require the condition to be permanent?
- ✓What’s the maximum I can accelerate per year and in total?
- ✓Is the payout discounted, or is there a flat fee?
- ✓Which critical illnesses are covered?
- ✓Can I add these riders to a policy I already own?
- ✓How does a claim affect my cash value and premiums?
I don’t have kids or anyone who depends on me financially, so I didn’t think I needed life insurance. The agents at Modern Money showed me I can use my policy while I’m alive if I become terminally or chronically ill, to supplement my income while I’m out of work. I’m so glad I started this policy.
Questions
Living benefits FAQ
What are the living benefits of life insurance?+
Living benefits are features that let you use part of your life insurance while you’re alive. Most are accelerated death benefit riders that pay part of the death benefit early after a terminal, chronic or critical illness. Permanent policies also build cash value you can borrow against.
Does term life insurance have living benefits?+
Many term policies include or offer accelerated death benefit riders, so yes, term can have living benefits. Term has no cash value, though, so riders are the only way to access it while living.
How much can I take as a living benefit?+
It depends on the carrier and rider. Most cap the amount as a percentage of the death benefit or a dollar maximum, and some cap it per year. Many also discount the payment or charge a fee. We show you each carrier’s limits side by side.
Are living benefits taxable?+
Terminal illness payments are generally excluded from federal income tax, and chronic illness payments may be excluded up to IRS limits, according to IRS Publication 525. Your situation can differ, so confirm with a tax professional before you file a claim.
Do living benefit riders cost extra?+
Some accelerated death benefit riders add no premium and only charge when you use them. Long-term care and some critical illness riders add premium. It varies by carrier, which is one reason to compare.
Where can I get life insurance with living benefits in Long Beach?+
Modern Money’s office is at 2051 E Spring St, Long Beach, CA 90806. We compare living benefit policies from several carriers for families across Los Angeles, Orange and Riverside counties, in person or by video, in English or Spanish.
See what your policy would actually pay
Bring your current policy or start fresh. We’ll compare living benefit riders from several carriers and show you the numbers.
[Licensing and disclosure wording: to be added at client review]