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What Is Typically Covered In A Life Insurance Policy

life insurance policy

Life insurance with living benefits is a type of life insurance that allows policyholders to take advantage of certain benefits while they are still alive. What is typically covered in a life insurance policy? These living benefits can help provide financial assistance to cover medical expenses or support your family in the event of a major illness, disability, or death.

Living Benefits are designed to provide multiple layers of protection that can help you receive the death benefit that’s included in your policy when you pass away, as well as many additional benefits when you’re still living. These benefits can include access to a lump-sum cash payment, accelerated death benefits for long-term care, or even tax-free payments to help cover medical expenses.

How to Use Life Insurance While Alive

When it comes to using life insurance while alive, there are two main options for doing so. The first to use the accelerated death benefit rider, which allows you to receive a portion of the death benefit while you’re still alive. The amount of the benefit is dependent on how much coverage you have, as well as the life insurance company’s terms and conditions. The other option is to use a Living Benefits rider, which is a specific type of life insurance rider that can allow you to access part of the policy’s cash value or death benefit while you’re still alive.

Life Insurance Beneficiary Rules

One of the most important aspects of life insurance is the beneficiary rules. A designated beneficiary is the person or entity who is entitled to receive the death benefit of your policy when you die. Beneficiaries can be your family members, friends, a charity or other organization, or even your estate. However, it is important to note that if you do not designate a beneficiary, your state’s intestate succession laws will dictate how the death benefit will be paid out. 

Types of Life Insurance

There are several different types of life insurance available, each with their own set of benefits and drawbacks. The two main categories of life insurance are term life insurance and permanent life insurance. 

Term life insurance offers coverage for specified length of time (typically 10, 15, 20 or 30 years), and is usually the most affordable type of life insurance. With this type of life insurance, you’ll receive a death benefit if you die within the stated time frame, but if you outlive the term, the policy will expire with no payout. 

Permanent life insurance, on the other hand, offers coverage that is designed to last throughout your lifetime. These policies usually require the policyholder to take a medical exam and provide proof of health before they can receive coverage. The policy may also accumulate a cash value over time, which you may be able to access while you’re still alive via a living benefits rider.

Life Insurance Cost

The cost of life insurance can vary depending on a number of factors, such as your age, health, lifestyle, and the amount of coverage you want. Generally, term life insurance is more affordable than permanent life insurance, though the cost of both can vary greatly depending on the life insurance company. 

Life Benefits Policy

A living benefits rider is an option that may be available with some permanent life insurance policies. A living benefit rider essentially allows the policyholder to access some or all of the death benefit or accumulated cash value of the policy while they are still living. This can be a useful option for policyholders who have an immediate need for cash, but want to make sure that their death benefit is still available to their beneficiaries when they die. 

Contingent Beneficiary

Another important rule to keep in mind when it comes to life insurance beneficiary rules is the contingent beneficiary. A contingent beneficiary is a person or entity that will receive the death benefit from a policy if the original beneficiary has died. While life insurance policies allow you to name multiple beneficiaries, it is important to also name a contingent beneficiary, as this ensures that the death benefit will still be repaid if the original beneficiary dies before you do.

Life insurance with living benefits provides an additional layer of protection that you and your family can utilize even while you’re still living. So now you can better understand what is typically covered in a life insurance policy. It’s important to make sure you understand the life insurance beneficiary rules, as well as the types of life insurance and their associated costs. Additionally, be sure to look into any living benefits riders that may be available through your policy, as this can give you more flexibility and access to the cash value or death benefit of your policy while you’re still living. Call Health Benefit Services today to discuss life insurance death benefits and the best policy for you! 

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