Canadian life insurance blog

Life insurance is about protecting your family’s future and term life insurance should be part of your plan for providing financial protection for your loved ones, business, or estate. There are a variety of coverage options available to fit your budget and give you the coverage and peace of mind you need.

In most cases your family or business only benefit from Life Insurance if you die. And while that’s simply the nature of life insurance, it’s not exactly the most desirable trade off. Wouldn’t it be nice if term life policies offered benefits while you were still living? They can!

Living Benefits

Living benefits are exactly what the name implies. They are benefits paid from the term life policy while you are living. More commonly, they are known as accelerated death benefits. With these benefits, the life insurance company pays or advances a portion of the policy’s death benefit to you to pay for care or treatment you may need. The company will then pay the balance of the death benefit to your beneficiary(s) if you were to die.

Limitations to Accelerated Death Benefits

It’s important to understand that there are some limitations with these types of benefits.

• Availability – Accelerated death benefits are not available everywhere. Many standard term life policies that offer accelerated death benefits also have restrictions based on where you live. 
• Benefit Limits – Many benefits limit the total amount available and frequency with which you can tap into your accelerated benefits. Again, it's important to understand these limits.
• Fees – Accelerated death benefits are essentially loans against the policy’s face amount. The company will use a benefit interest rate to determine the present value of future benefits. This rate, along with administrative fees will be factored into the amount of the accelerated benefit allowed.

It’s important to understand how your benefits work before you purchase a policy. Don’t wait until a critical illness occurs to figure out how your policy works.

For more information and to determine if this type of life insurance is a good fit for you, give us a call.