Wednesday, June 15, 2022

What Are Living Benefits Of Whole Life Insurance

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Whole Life Coverage May Be Right If You:

  • Need coverage that doesnt require a medical exam or health questions
  • Have a tight budget or fixed income and need a premium that wont increase
  • Need coverage for burial, funeral, or other final expenses, or to pay off debts
  • Would like to supplement existing insurance coverage
  • Want to build cash value and have access to funds in an emergency

10-year level term: ICC13L116P or state equivalent. In FL, D470LFL13P.

15-year level term: ICC13L116P or state equivalent. In FL, D470LFL13P.

20-year level term: ICC13L116P or state equivalent. In FL, D470LFL13P.

20-year level term with return of premium: ICC13L117P or state equivalent. In FL, D472LFL13P.

30-year level term: ICC13L116P or state equivalent. In FL, D470LFL13P.

30-year level term with return of premium: ICC13L117P or state equivalent. In FL, D472LFL13P.

This is a solicitation of insurance. A licensed agent/producer may contact you.

Coverage may not be available in all states and may vary by state.

All guarantees subject to the financial strength and claims-paying ability of the issuing company. Each company is responsible for its own financial and contractual obligations.

Policy Exclusions/Limitations: The death benefit will not be paid if the insured’s death results from suicide, while sane or insane, within two years from the date of issue. Instead, we will pay the sum of the premiums paid since issue, less any loan and loan interest due and any withdrawals. Exclusions and limitations may vary by state.

What Are The Accelerated Death Benefit Limitations

Its important to note that there are some limitations to be aware of with these types of benefits. Whether it be a legal issue that needs ironing out or ineligibility based on your underwriting, you may face issues getting your policy.

There are many factors considered by the life insurance company when evaluating a request for accelerated death benefits. Its a good idea for you to get a solid understanding of these benefits before you purchase a policy.

You dont want to wait until a chronic illness strikes to learn how your policy works. The two most prominent limitations are legal & financial and prior underwriting.

Your life insurance quotes are always free.

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How Do I Find Cheap Whole Life Insurance

First, determine how much life insurance you need. Most life insurance company websites have free life insurance calculators to help you figure how much coverage you need. Generally, the calculators look at the financial obligations you want to cover if you died and the financial resources you currently have available.

Once you have determined the life insurance amount you need, the next step is to compare life insurance quotes from multiple life insurance companies. Life insurance quotes will vary widely among companies. You can get free quotes online or work with an independent insurance agent who can gather quotes from multiple companies.

The Cost Is Guaranteed To Stay The Same4

Your premium payments, the amount you pay the insurance company each month, will never go up.5 By remaining level, these premiums may potentially feel much more affordable over the long run. While whole life premium payments in the early years are higher than those for term life, the advantages increase significantly as time passes. For retirement planning, this would mean guaranteed availability of life insurance in your senior years, at a fixed cost.  

Giving Money To A Charity Or Non

The Benefits of Whole Life Insurance

If you want to help your favorite causes, you can use your insurance policy in several ways. Charitable giving can also provide income tax benefits now, while youre alive. A charitable donation may entitle you to an income tax deduction  often beneficial in cases when youve had a high earning year. In addition, you can leave the money accumulated in the account to the non-profit after youre gone. Note that tax laws change so it makes sense to consult with a tax advisor.

What Happens When You Die

A major selling point of whole life insurance is that it will be in force until your death, unlike term life insurance. You cant outlive the whole life policy as long as youve paid the premiums.

But heres a kicker: For most policies, the policy pays out only the death benefit, no matter how much cash value youve accumulated. At your death, the cash value reverts to the insurance company. And remember that outstanding loans and past withdrawals from cash value will reduce the payout to your beneficiaries.

Some policies allow you to purchase a rider that gives your beneficiaries both the death benefit and the accumulated cash value. This provision also means youll pay higher annual premiums, as the insurance company is on the hook for a larger payout.

Picking Life Insurance Beneficiaries

When you buy a policy youll choose a life insurance beneficiary to receive the death benefit. You dont have to split the payout equally among beneficiaries. You can designate the percentage for each, such as 75% to Mary and 25% to John.

Its also a good idea to also designate one or more contingent beneficiaries. These folks are like your backup plan in case all the primary beneficiaries are deceased when you pass away.

Designating beneficiaries is an important task, as is keeping your designation up to date with your wishes. The life insurance company is contractually obligated to pay the beneficiaries named on the policy, regardless of what your will says. Its wise to check once a year to verify your beneficiaries still reflect your wishes.

Who Should Consider Universal Life Insurance

If you want life insurance coverage that lasts the duration of your life, you might consider a universal life insurance policy. For example, universal life insurance can fund a trust to take care of a special needs child or other dependents after youre gone.

You might also consider a universal life insurance policy if you have big long-term savings goals and need both an investment vehicle and life insurance, but only after youve maximized other savings options such as retirement plans.

See our ratings to find the best life insurance companies.

The Living Benefit Rider Of 2020

In addition to some of the benefits we discussed above, in 2020 some life insurance companies are taking things to the next level when it comes to living benefits.One company that comes to mind is Haven Life. 

They have created a new style of living benefits that they call Haven Life Plus:

This Haven Life Plus program is going to be included as a rider on your policy and isn’t currently available in Florida, New York, North Dakota, South Dakota and Washington.This living benefit plan comes with some amazing extras:

Living Benefits: Nursing Home Living Benefit Rider:

Nursing Home Riders. also known as Long Term Care riders are sometimes a feature of cash value life insurance policies and not term policies.  However we add them here for the sake of directly dealing with the subject.  A Long Term Care Rider may allow money to be paid out in the situation where you are confined to a nursing home within strict accordance to the insurance contract.

Long Term Care Insurance policies are very expensive so it should come as no surprise that a Long Term Care rider is not cheap either.  Because Long Term Care insurance has become very difficult to even find, LTC riders paired with Whole Life Insurance Contracts may be a best bet in this situation.

Who Are The Best Living Benefits Life Insurance Companies

Several companies offer this living benefits insurance policy with their level policies or additional rider.

Northwestern Mutual offers an early pay benefit if the insured has been diagnosed with less than six months to live. This isnt available in some states. Likewise, some policies are exempt from the early pay benefit.

With Northwesterns early pay benefit, you can expect to get up to 50% of your death benefit ahead of time.

MetLife offers long-term care and an accelerated death benefit rider to assist with any care that your loved one may need. This rider will keep you from having to dip into your own personal savings to cover assisted living or a part-time nurse.

To qualify, the insured will have to be unable to perform the basic and necessary acts of daily life such as bathing, eating, dressing, and using the bathroom on their own.

New York Life offers an accelerated care rider that can be used in case of permanent or temporary impairment. To qualify, the insured will have to be unable to perform the basic and necessary actions of everyday life. They will front you half your death benefit, up to $500,000.

Prudentials BenefitAccess rider will front you up to 100% of your death benefit if youre facing a chronic or terminal diagnosis that requires further care.

As long as you sign up at the start of your policy and have a coverage amount of at least $100,000, youll be all set to take full advantage of this rider.

How To Get More Benefits And Value When Buying Life Insurance

Generally, the most cost-effective way to buy life insurance is to do it when you are younger and healthier. Life insurance companies generally give younger customers lower rates for reasons that are easy to understand:

  • They tend to have a longer life expectancy
  • They are less likely to have been diagnosed with a serious disease
  • They are likely to pay premiums over a longer number of years

Not in your twenties anymore? Dont worry. There are still a lot of affordable options. But if you want to get the most value out of each premium dollar, it pays to do your homework and figure out exactly what you want from your coverage. Most policies have riders that can add worthwhile benefits for a relatively small added amount. Two of the most popular riders include:

  • Accelerated death benefit: This rider can help pay for needed care of a diagnosed chronic or terminal illness. While this can be very useful in a time of need, you should also know that funds paid out will typically lower the death benefit paid to your family.5
  • Disability waiver of premium: This valuable rider gives you the ability to stop paying premiums if you have a disability while keeping your coverage.6

There are other kinds of riders you should know about as well, so talk to an experienced professional like a Guardian financial professional before deciding to purchase one policy or another. You should also find out about other ways to control your policy costs, including:

How Does Universal Life Insurance Work

Benefits of Life Insurance

Universal life insurance is a type of permanent life insurance. It can cover you for the duration of your life, as long as the premiums are paid. Some forms of universal life insurance also offer a cash value component.

The cash value can build up investment gains .

You can take money out of cash value via a withdrawal or loan. The insurance company will reduce the payout to your beneficiaries by the amount of any withdrawals or outstanding loans if you pass away. But for some buyers, accessing cash value is more important than a full payout to beneficiaries later on.

See Forbes ratings of the best life insurance companies for cash value policies.

Like other life insurance policies, including whole life insurance and term life insurance, you can add a variety of riders to universal life policies. Riders are a way of adding extra coverage or features, usually at extra cost.

One example is an accelerated death benefit rider. Often included with policies at no additional cost, it lets you take money from your own death benefit if you are diagnosed with a terminal illness. Other common options are chronic illness riders and long-term care riders, which both let you take money from the death benefit when you have certain health conditions.

Know What Youre Getting Into

Whole life insurance is a product that has some uses, but its not for everybody. The additional benefits offered by whole life can often be found by using your retirement and investment accounts for gains, in combination with a term life insurance policy. Before purchasing any insurance policy, be sure to fully understand the options available, and the various provisions each policy comes with.

Does Cash Value Life Insurance Have Living Benefits Options

Living benefits typically refers to living benefits riders. However, cash value funds found in permanent life insurance are sometimes categorized as living benefits.

Some permanent insurance features allow you to access your cash value while youâre alive, but not your death benefit:

  • Paid up additions: Additional coverage purchased with accumulated cash value funds. 

  • Policy loans: Loans taken against your account using the cash value as collateral. The loans can be used for any purpose.

  • Policy surrender: Giving up your policy in exchange for any cash value. Youâll lose insurance protection and the funds may be taxable.

  • Premium payments: Universaland variable life insurancepolicies allow you to use your cash value to pay your premiums.

Permanent life insurance is not the best way to get living benefits, since cash value interest rates are relatively low and premiums are five to 10 times higher than term life rates. To pull cash from your policyâs death benefit, youâll still need to use a rider.

Ready to shop for life insurance?

What Are The Life Insurance Options For Seniors

It depends on your needs. Life insurance generally gets more expensive with age, so many seniors get policies with just enough coverage to provide for funeral expenses to avoid burdening their family. Life insurance can also be used for estate planning strategies, where it can be a tax-advantaged way to leave assets to heirs.

The Benefits Of Different Kinds Of Life Insurance

There are two basic kinds of life insurance: term and permanent like whole life. With a term life policy, you pay a specific premium for a defined term . If you die during that time, a death benefit is paid to your beneficiaries but when the term is over you must get new coverage or go without. A whole life policy is permanent life insurance that last your entire life.

Who Are The Top Life Insurance Companies By Market Share

Here are a few companies that already offer accelerated death and accelerated care benefits either as a rider or already included in the policy.

Top Five Life Insurance Companies by Market Share


A market share indicates a companys percentage hold on the consumer base. These companies have high market shares due to their excellent service and the degree to which they have helped customers in their times of need.

There are many questions to answer before we can say who has the best term life insurance policy. Add in special scenarios like accelerated death benefits and things become even more difficult.

What Are The Living Benefits Of Life Insurance

Living benefits are exactly what they sound like: benefits in a life insurance policy that you can make use of while you are still alive.

Some life insurance living benefits come built into policies, but many have to be attached to the coverage with a rider. These riders often give you more protections, but you will pay an additional premium to have them included in your policy.

Not all living benefits work the same way. To help you determine if life insurance with living benefits is right for you, you should be aware of some of the most common options.

More Expensive Than Term

The main knock to whole life you always hear, particularly from certain financial pundits like Dave Ramsey, are that whole life is more expensive than term. He also advises to buy term and invest the difference.

Just as an aside, the phrase buy term and invest the difference was not originated by Dave or Suze Orman. Rather, the saying was originated by Primerica founder Arthur Williams Jr., net worth 1.4 billion as of 2008. That is some pretty successful marketing!

What the pundits dont talk about is that whole life has a savings component and death benefit component.

Basically, whole life is both a savings account with a leveraged death benefit, and decreasing term insurance. As your cash surrender value grows, your reserves against the death benefit increases, while the net amount at risk goes down.

And another thing the pundits dont address is that

As you age, term gets more expensive

The major hang up with this line is reasoning of buy term and invest the difference is that no one ever invests the difference.

But what we will point out is that term insurance gets more expensive the older you get.

In contrast, whole life provides fixed premiums for the entire duration of the policy.

Best For Bundled Coverage: State Farm

Life Insurance: Permanent, Whole, Term, Universal ...

 State Farm

State Farm stands out because of its discounts for multiple types of insurance coverage. The company allows you to bundle life insurance with home or renters, health, auto, an umbrella liability policy, and many more options. State Farm is the best in our review for bundled coverage.

  • Online quotes for some life insurance policies

  • Meet agents in-person or by phone

  • Must speak to an agent for some policies

  • Some living benefits restrictions by state

  • Less competitive premiums

State Farm ranked high because you can save money by bundling multiple types of insurance. Founded in 1922, the company offers auto, health, home or renters, life insurance, and many more options. The company has an A++ credit rating from AM Best and received just 19 complaints with the National Association of Insurance Commissioners in 2020, an incredibly low amount for a company of its size.

State Farm offers a range of life insurance policies with living benefits, including term, permanent, and universal coverage. You may buy life insurance through an agent nationwide, either in-person or by phone, with restrictions on some policies, depending on where you live. State Farm offers a flexible care benefit rider, which offers accelerated death benefits or long-term care protection, as well as a waiver of premium for disability. You may contact State Farms customer service team by phone or through the companys mobile app.   

Universal Life Insurance Benefits

Universal life can provide you with a variety of different payment options, including a flexibility of changing your death benefits, as well as the potential to accumulate cash value over time. Here’s how:

  • Since there is a cash value component, you may be able to skip premium payments as long as the cash value is enough to cover your required expenses for that month
  • Some policies may allow you to increase or decrease the death benefit to match your particular circumstances**
  • In many cases you may borrow against the cash value that may have accumulated in the policy
  • The interest that you may have earned over time accumulates tax-deferred

Best For Seniors: Mutual Of Omaha


Mutual of Omaha shines with whole life insurance policies for seniors up to 85 years of age and those with term coverage may renew every year through age 95. Seniors may also tap accelerated death benefits for terminal illness or a nursing home.

  • Range of policy options for seniors

  • Online quotes for term and whole life

  • No medical exam for some policies

  • Slower application process for some policy types

  • Must speak with an agent for some policies

  • Some complex policies may be confusing

We chose Mutual of Omaha as best for seniors because it offers life insurance policies for those up to age 85 with accelerated death benefits. The Omaha, Nebraska-based company has been in business since 1909, offering a range of insurance products, and has earned an A+ financial strength rating with AM Best. The company received 66 complaints through the National Association of Insurance Commissioners in 2020, slightly above average for a company of its size.

Mutual of Omaha offers various life insurance plans, including term, whole life, childrens whole life, universal, and accidental death insurance. Depending on your policy, you may get a quote and apply online, speak to an agent by phone, or meet with an agent in person. 

You cant get an online quote for universal life or whole life with a death benefit of more than $25,000, however. 

Read the full Mutual of Omaha Life Insurance review

Whole Life Insurance Benefits

Whole life policies offer you a fixed level premium that won’t increase, the potential to accumulate cash value over time, and a fixed death benefit for the life of the policy. In addition:

  • Any cash value growth is tax-deferred
  • Whole life may allow you to take loans against the policy
  • Whole life offers the ease of budgeting for a regular and consistent premium payment every month

Example Of Whole Life Insurance

For insurers, the accumulation of cash value reduces their net amount of risk. For example, ABC Insurance issues a $25,000 life insurance policy to S. Smith, the policy owner and the insured. Over time, the cash value accumulates to $10,000. Upon Mr. Smiths death, ABC Insurance will pay the full death benefit of $25,000. However, the company will only realize a loss of $15,000, due to the $10,000 accumulated cash value. The net amount of risk at issue was $25,000, but at the death of the insured, it was $15,000.

Most whole life insurance policies have a withdrawal clause, which allows the policyholder to cancel coverage and receive a cash surrender value.

Let’s Get Started And Take A Look At What Product Is Right For You

Whole Life Insurance

For those looking to balance cash value accumulation and guaranteed life insurance coverage, this is a popular option. Over time you may find your cash value to be a convenient way to supplement retirement income.

Custom Whole Life Insurance

If you only want to pay premiums for a specific amount of timeas little as five yearsor if you want to maximize the cash value growth in your policy, this may be the best choice for you. If you choose to pay premiums over a shorter amount of time, they may be higher. You can schedule your payments to fit your budget while building cash value that can be used for retirement income, college tuition, or whatever else comes your way


Work with a financial professional to customize your policy with these add-ons, which are also known as riders.

Premium coverage when you need it

If you become disabled, New York Life will cover your premiums if you purchase the Disability Waiver of Premium option.** Your coverage continues as long as youre disabled.

Planning for health events

If you want tax-free acceleration of your policys death benefit to protect against financial hardship should you become chronically ill, you might want to purchase our Chronic Care option.** Additionally, if you are terminally ill, you could use a portion of your death benefit to pay for treatment or care with the Living Benefits option.

Grow your policy faster

Protect your family in the event of an accident

Whole Life Insurance: Lots Of Guarantees At A High Cost

Like universal life insurance, whole life insurance gives you coverage for the duration of your life. It also includes a cash value component. The biggest difference between whole life insurance and universal life insurance is the cost: Whole life insurance is generally the most expensive way to buy permanent life insurance because of the guarantees within the policy: premiums are guaranteed not to change, the death benefit is guaranteed and cash value has a minimum guaranteed rate of return.

Also, indexed and variable universal life can give you flexibility with payments and the death benefit amount after you buy the policy.

Whole life, on the other hand, guarantees that your premiums, the cash value guaranteed rate of return and the death benefit wont change. Whole life insurance is suitable for someone who likes predictability and is willing to pay for it.

In addition, many whole life insurance policies pay dividends. These are like annual bonuses paid by mutual insurance companies to customers, although not guaranteed. You can use dividends to pay premiums, add it to your cash value or simply take the money.

The Basket You Live In

Home ownership is the most common real estate asset. You may have heard that your home is the investment you can live in. Indeed, you can live in it, but historically speaking, the stock market has yielded stronger returns on investment. Additionally, if you need cash quickly, it can be tough to liquidate real estate assets fast. Finally, we all know what happened during the housing crisis a decade ago. But home ownership is more than just an investment, its a lifestyle decision you have to decide whats right for you.

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