Dec 132012

Buying Life Insurance | What’s In It For Me?

When you think about buying life insurance you might ask; what’s in it for me?

The number one reason life insurance is purchased is for the death benefit.  It can be used to pay off debts or pay estate taxes.  Life insurance can replace income if a spouse or parent is gone.  Businesses use life insurance to soften the blow if something happens to a key employee.  And there is no better or cheaper way to fund a buy-sell agreement.  Families use life insurance to supply cash to equalize the inheritance for children if one (or some) children inherit the family farm or family business.

All good reasons to have life insurance.

But What’s In It For Me?

Can the insured benefit directly from life insurance on his/her life?

The answer is yes; in many ways.  Right now we will focus on just one way.

Some insurance companies have developed a Chronic Illness Accelerated Benefit.  The details may be a bit different from company to company, but generally here is how the Chronic Illness Accelerated Benefit can benefit an insured.

If at some point your health turns poor and you need permanent assistance with at least two Activities of Daily Living (ADL), the Chronic Illness Accelerated Benefit gives you the right to access part of the death benefit even though you are still living.

The six Activities of Daily Living are bathing, continence, dressing, eating, toileting and transferring.

Here is how it may work for the insured.

Think about your situation if you cannot perform two ADL’s.  Quite possibly you will need home health care assistance to stay at home or you may require nursing home care.  Both are expensive.

If you have life insurance with a Chronic Illness Accelerated Benefit you can take part of the death benefit amount as a cash payment.  This money is yours to use as you see fit.

You can help pay for the nursing home.  Or you can pay medical bills.  Or pay expenses so your spouse can travel with you for medical treatment.

You get the idea.  Money exactly when you need it.

As I said earlier, the specific terms of the Chronic Illness Accelerated Benefit may be different for each company.

Some companies let you access your money if you have a severe cognitive impairment as well if you need assistance with two ADL’s.

You may have a 90 day waiting period before you can access your money.

And remember not all insurance companies have this benefit in their portfolio and those who do have it do not offer it on all types of policies.

The Bottom Line | Money When You Need It

Here is the bottom line.  If you choose the right insurance policy you may be able to access part of the death benefit as a cash payment if your health turns sufficiently bad.  Money when you will truly need it.

Ask your insurance broker what options are available for you.

Then give life insurance another look.  Not only will it benefit your family, but you may benefit as well.


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 December 13, 2012  Posted by at 9:35 pm Whole Life Insurance Tagged with: