There is a type of life insurance that, in addition to paying the death benefit to the designated beneficiary, can provide a living benefit if the insured contracts a terminal, chronic, or critical illness.
This policy is known as universal life insurance with living benefits. To access this benefit, the insured must be diagnosed with one of the specified conditions.
It is important to define what is considered a terminal, chronic, or critical illness.
A terminal illness is one where a doctor diagnoses that the patient has a life expectancy of 12 months or less due to their condition.
A chronic illness is when the illness prevents the person from performing two of the six activities of daily living independently, such as bathing, dressing, eating, moving, or controlling continence, or when there is deterioration or loss of intellectual capacity.
A critical illness includes situations like a heart attack, cancer diagnosis, stroke, or the need for an organ transplant.
Under these conditions, if the insured is diagnosed with a terminal illness, they can access up to 100% of the death benefit if needed or a significant portion of it.
If the diagnosis is for a chronic or critical illness, insurers typically allow advancing 24% of the death benefit or 2% of the benefit annually. For example, if the death benefit is $500,000, the insured could receive $120,000 or $10,000 annually.
There is an additional condition for accessing the living benefit: if the insured needs long-term care (LTC) and requires nursing home admission or home care, they may request a monthly payment of 1% of the death benefit. Using the same example, if the benefit is $500,000, the insured would receive $5,000 monthly for their care.
As you can see, with universal life insurance with living benefits, you are also protected for difficult times. If this type of life insurance interests you or if you would like to learn more about its advantages, simply contact Univista Insurance.
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