Life insurance is just not what it used to be! When most people think of life insurance, they think of it in terms of paying a monthly premium until you pass away and then your family receiving a check. While that is still true, insurance companies have made some great changes to their policies and adding additional features that policies owners are able to access while still alive. Here are three cool option available in most life insurance companies offer.
Living Benefits
Living benefits are an amazing feature that come with some life insurance policies. This benefit allows you, the owner of the policy, to access a portion of the death benefit if you have a critical, chronic, or terminal illness. For example, if you have a $500,000 policy and have a heart attack, you may access a portion of your $500,000 death benefit. While the amount you may have access to will differ from one company to the next, whatever you access will decrease the death benefit. So if from that $500,000 policy you take out $200,000, then your death benefit is now $300,000.
Long Term Care
Most seniors are really shocked to find out that Medicare will NOT pay for their long-term care needs should they need them; and a recent report has shown that 1 in 3 seniors will indeed need long term care. Insurance companies are seeing this need and some companies have added long term care as a rider to their insurance policies. Policy owners who have this rider are able to use a portion of their death benefit, to pay for their long-term care needs. These policies allow for a small percentage of the death benefit, like 2%, to be paid out monthly to directly to you for your long-term care needs. So, a $500,000 policy will could pay you $10,000/month. This is a huge benefit as trying to pay for long-term care out of pocket is extremely expensive. “The median cost for a home-health aide for an eight-hour day is more than $49,000 a year, while nursing care in a facility with a private room has a median cost of almost $98,000 a year.” *
Paid-Up Additions Rider
Paid-up Additions riders are an option only on whole life policies. PUA/PUAs for short, are essentially an amount of insurance that is fully paid for when issued and therefore does not require any further premium to be paid (hence the term “paid-up”). With PUAs, the premium is used to purchase a specific amount of life insurance based upon your age at the time it is purchased. The life insurance is permanent and does not require any other premium and is “paid-up”. PUAs are a powerful tool in whole life policies because they help to increase the cash value in the policy.
Life insurance has always been an important part of a family’s financial well-being. Insurance companies have done a great job of adding additional benefits to their policies so that their clients are able to have access to benefits earlier than death. While these are only a few of the options out there, there are so many more to choose from. Depending on your needs, future care plans, and goals, it is important to consider what is in your life insurance policy to ensure that you and your loved ones are fully protected.
*Genworth 2017 Cost of Care Survey, conducted by CareScout