Living Benefits

If you become terminally ill, you may need extra cash to pay medical bills and living expenses.
Many companies provide living or accelerated benefits to individual life insurance policy holders who suffer a life-threatening illness.
When you apply for living benefits from your life insurance policy, you must provide your insurance company with a medical opinion that you are in the terminal stages of an illness and have 24 months or less to live.
The insurance company must also ascertain that the proceeds from your policy have not been assigned to pay off a loan or debt, or left irrevocably to someone who might sue for full benefits once you die.
If these two conditions are met, the company typically pays you a percentage of the value of your policy, not exceeding 50 per cent.
Some companies pay predetermined maximum dollar amounts in living benefits. Others treat the living benefits payment as an advance or loan and charge interest on it. Still others require you to pay regular premiums to keep your policy in force after you receive the benefits.
When you die, the amount that is left in your life insurance policy, less any interest charges, will be paid to your beneficiary or estate.