Term Insurance with Living Benefits

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The key concept behind term life insurance is to secure the financial future of your dependents in case of your untimely death, with most people buying life insurance plans while having this particular reason in mind. However, what the majority of policyholders don’t realise is that a life insurance plan can also help you during your lifetime.

A few special benefits are generally offered with term life insurance plans that are meant to help the policyholder obtain the best value out of their term life insurance. These benefits are termed living benefits or accelerated death benefits since you can use them while you are alive.

Let’s cover all the relevant details about term insurance with living benefits to understand how these additional covers can help you as a policyholder.

What are the Term Insurance With Living Benefits Plan?

Living benefits of a term life insurance plan are rider covers aimed to benefit the policyholder during their lifetime. These benefits are unlike the death benefits, with the latter accessible only after the policyholder’s death. Both whole life insurance plans and term life insurance plans provide these benefits.

Term life insurance with living benefits allows you to access your death benefit fund when you are still well and alive. However, it should be noted that the access can only be given as per the life benefit rider you have chosen. Most life benefit riders only allow access to these funds in case of chronic, terminal, or critical illnesses, as they can be utilised then to pay for your treatment expenses and home nursing services.

Another aspect to note here is that accessing your life benefits leads to reduced death benefit funds, which translates into lesser funds for the policyholder’s dependents after their death.

Types of Term Life Insurance Living Benefits

Several types of term life insurance living benefits can be found in options. Most of these benefits, again, are related to long-term and life-threatening illnesses. With that clear, let’s cover what term life insurance with living benefits may bring to you:

  • Critical Illness Cover: Critical illnesses are potentially life-threatening diseases that shorten your life span even after treatment. The treatment of these illnesses costs a significant amount, often being enough to exhaust your life savings. In case you are diagnosed with a critical illness during the tenure of your term life insurance plan, you can withdraw a part of your death benefit to cover the treatment costs. 

The benefit only works if your illness is included in the list of covered illnesses in your plan. Some generally covered critical illnesses include cardiovascular diseases, stroke, kidney and/or liver failure, and so on.

  • Terminal Illness Cover: A terminal illness is defined as an illness that is incurable at its current stage and will result in death. These illnesses are also known as life-limiting illnesses. Several critical illnesses become terminal illnesses when they reach their final stages, with advanced liver cirrhosis, advanced cancers, and advanced cardiovascular diseases being some examples of the same. Terminal illness living benefits cover offers end-of-life care expenses and other related expenses. 

You should take note that many term life insurance plans include terminal illness coverage as a basic benefit. Consequently, you should check the terms and inclusions of your plan closely before investing in riders. If your plan does include a terminal illness cover as a basic benefit, you will be spared from buying term insurance with living benefits at all.

  • Chronic Illness Cover: If you get diagnosed with a chronic illness and are unable to perform a minimum of any 2 out of the 6 ‘activities of daily living’, your chronic illness cover comes into effect. In such cases, you can get compensation to cover the lost income or to cover the treatment cost of this illness. Among the common riders for term insurance with living benefits, the activities of daily living included here are eating, getting dressed, bathing, toileting, continence, and transferring. 
  • Disability Waiver of Premium: While this is not an accelerated death benefit, you can still benefit from the disability waiver of premium. If you are unable to pay the premium of your term life insurance plan due to a disability, this add-on will help you save your policy. Without a disability premium waiver, your term life insurance will expire immediately as they rarely come with a cash deposit facility. 
  • Return of Premium: This type of term insurance with living benefits ensures that your premium is returned to you if you don’t pass away during the tenure of the plan. Generally, such plans are more expensive than other term insurance plans without a return of premium benefit. 

Do You Need to Pay Extra for Term Life Insurance Living Benefits?

Yes, most term insurance with living benefits plans cost more as the living benefits are also available as add-on covers. However, if a living benefit has been added as basic coverage of the plan, you won’t be paying any extra money.

Insurance providers generally list their riders and add-ons with the term insurance plans. If the description of these plans does not mention whether the living benefits will be charged extra as add-ons or are included as basic covers, you should contact the provider for clarity. The additional amount you will pay for term insurance with living benefits will also depend on your health level.

How to Choose Your Term Insurance with Benefit?

Even though the options you have to choose from are not overwhelming in number, making the choice can still be quite difficult. Given below are a few tips and tricks to help you understand how you can buy the ideal living benefit cover for your term life insurance plan:

  • Consider if you are pre-exposed to any kind of critical illness, whether due to your family history or your current health condition. If you are indeed at risk of getting a critical illness, consider getting the critical illness cover with your term insurance plan. 
  • Terminal illness cover is only required if your critical illness has come to an untreatable stage. In this aspect, you should examine the health of your family and the history of particular critical illnesses and the stages. You should consider spending on this cover only if there is a considerable chance of your critical illness turning into a terminal disease. However, as most providers add it as a basic benefit, you may be able to skip this step entirely. 
  • Chronic illness cover could turn out to be a good investment as several chronic but not critical illnesses can limit your ability to perform daily tasks. You can consider taking such term insurance with living benefits. 
  • Return of premium can come in handy if you are a generally healthy person. If you think that you can easily outlive your term insurance with living benefits, you should consider taking this particular add-on cover. On the off-chance that you meet your untimely demise, your family members will still receive a substantial death benefit for financial support. If otherwise, you can get all your premium back. 
  • Several critical illnesses can lead to disability. The same applies to accidents. Thus, you may want to invest in this type of cover if you are at risk of getting into road accidents or disability-causing illnesses. 

Key Takeaways

  • Term insurance with living benefits is a beneficial way to ensure that you get the most out of your term insurance plan.
  • Terminal illness, critical illness, chronic illness, and several other covers are available when it comes to term insurance with living benefits. 
  • Many term insurance plans include terminal illness covers as basic benefits instead of add-ons. 
  • Choose a living benefit as per the health conditions you can plausibly develop later in your life. 
  • Consider all the risk factors and situations carefully before investing in term insurance with living benefits to make an informed decision. 
  • Your living benefits can differ as per the kind of life insurance plan you select. There are several other living benefits offered with whole life insurance plans. 
  • Consider comparing term insurance with living benefits on policybazaar.ae before the final purchase. This will acquaint you with the best term insurance plans in the UAE, enabling you to select only the most suitable plan for you.
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