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Information about all aspects of finances affected by a serious health condition. Includes income sources such as work, investments, and private and government disability programs, and expenses such as medical bills, and how to deal with financial problems.
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Because of your current health condition, you may be able to get money from your life insurance now thanks to a feature in both term and permanent life insurance policies known as a "living benefit" or "accelerated death benefit." Even if it's not described in your policy, this feature may be part of your policy, or you may be able to add it for free.

If you only receive a small percentage of the policy as a living benefit, you may be able to sell the remainder of the policy to a third party, if you desire. See: Selling Your Life Insurance Policy for additional information.

As a general matter, any money you receive from a Living Benefit is income tax free.

If you decide to apply for a living benefit, read: How To Apply For a Living Benefit.

For additional information, see:


  • Before contacting the insurance company to inquire about a living benefit, much less applying for one:
    • If your policy is less than two years old: Review the application for the insurance to be certain that all of the information you provided in order to obtain the coverage was accurate. During the first two years of any policy, the insurance company that issues the policy has a right to contest the validity of the policy. You want to make sure that they have no reason to do so.
    • During your initial inquiries about a living benefit with the insurance company or your employer, you do not have to disclose your condition or diagnosis. This doesn’t mean that you won’t be asked about your condition, however. If asked you may politely respond that you don’t wish to discuss it. We recommend you give an insurance company as little information as possible about your current health condition, at least until you are able to determine if you may be eligible for the living benefit.
  • Another means of getting money from a life insurance policy while still alive is a Viatical Settlement or Senior Settlement. For additional information, click here.

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Life Insurance

What Is A Living Benefit?

A "Living Benefit," also known as an "Accelerated Death Benefit," is a provision in a life insurance policy under which the insurance company agrees to pay part of the death benefit to an insured who has a shortened life expectancy while the insured is still living.

The difference between the amount advanced and the death benefit will generally be paid to the named beneficiary after the insured's death.

For example, let's say Glenn has a $100,000 life insurance policy, and a 6 month life expectancy. Glenn's insurance policy includes a living benefit that pays Glenn up to 75% of the death benefit if he has a life expectancy of 24 months or less. That means he can receive up to $75,000 while he is still alive. The difference between the amount advanced and the death benefit, or $25,000, will be paid to Glenn's beneficiary when he dies.

Living benefits are fairly new features on life insurance policies. Living benefits date from the 1990s as the insurance industry response to sales of life insurance policies (Viatical Settlements.) The theory the insurance companies have adopted is that they will have to pay the death benefit soon in any event, so there is little risk if the money is paid ahead of time. Of course, just because the insurance company agrees to pay a living benefit, it does not predict what will actually happen to the individual.

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How To Determine If Your Life Insurance Policy Has A Living Benefit

If you have an individual life insurance policy:

  • Start by reviewing a copy of your policy.
  • If you are unable to find information in your policy about a living benefit or accelerated death benefit, don't assume there isn't one. It is not uncommon for a Living Benefit to be added by means of a rider (an amendment) to a policy at the home office of the insurance company, and in some cases may be available even though there is no documentation at all. To determine if your policy has a living benefit, speak with the insurance company. If the person who answers the phone says there is no such provision for your policy, ask to speak with a supervisor. Even if there is no provision, a person with discretion may be able to add one for free. NOTE: Before you call the insurance company about this subject, see Cautions.
  • If you've can't find your copy of the policy, request a duplicate copy from your insurance company. You do not have to indicate a reason for your request at this point, other than to say that you can't locate your policy and would like a duplicate as soon as possible.

If you have group life insurance:

  • Begin the process of finding out if your policy has a Living Benefit by reviewing a copy of your certificate of coverage, or summary plan description.
  • If you are unable to find information about a living benefit or accelerated death benefit in your paperwork, don't stop. It is not uncommon for this provision to be added by means of a rider (an amendment) to a policy at the insurance company home office, and in some cases may be available even though there is no documentation at all. To determine if this is the case you will need to speak to the insurance company or group to determine the availability of this provision. Before you call the insurance company about a Living Benefit, see Cautions.
  • If you don't have either of these documents, ask your employer or plan administrator for them. You may even consider asking for a complete copy of the policy, to which you are legally entitled. You don't need to indicate the reason for your request initially, and may simply state that you wish to review the details of your coverage. NOTE: An employer or plan administrator may sometimes make it difficult for you to obtain complete information about your coverage. If you run into trouble, we recommend that you put your request in writing and keep pushing for the information. Keep copies of your request and detailed notes about any conversations you have in the event that you need to file a complaint in order to receive documentation.
  • If it turns out there is no living benefit as part of the group policy, ask the person in the group who deals with the insurance company to see if the provision can be added immediately. The provision is free so there is no reason to prevent the group from asking.

What To Look For In A Living Benefit

Living benefits vary from company to company with respect to:

The definition of a "terminal illness."

The maximum life expectancy.

Currently, maximum life expectancy ranges from 6 -- 24 months. Keep in mind that life expectancy is statistical -- about the past, and about large number of people. It does not predict what will happen to any individual.

The maximum amount that will be paid.

  • Some companies set the maximum as a dollar amount.
  • Some companies set the maximum as a percentage of the death benefit, ranging from 20% to 95%.
  • Some companies set the maximum as a combination of a dollar amount and a percentage. For example, the company will advance up to 50% of the death benefit, to a maximum of $50,000.

Whether there will be a charge for administration or interest.

If there is a charge, it could be deducted from the amount paid you now, or from the death benefit.

Limitations on the use of the money.

While most living benefit provisions do not restrict the use of the funds, some insurance companies do impose limitations. For example, that the money can only be used for medical purposes.

How the insurance company treats the remainder of the policy.

Some companies will simply reduce the death benefit of the policy which you will be able to keep in force if you wish. Others may treat the accelerated death benefit as a loan against the policy. Others have been known to cancel a policy if the payout is for an amount close to the full face value of the policy.

Whether an acceleration is permitted if the owner and the insured are not the same person.

What If My Life Expectancy Exceeds The Life Insurance Company's Requirements Or I Do Not Know My Life Expectancy?

Before we answer the question, keep in mind that life expectancy is about statistics, and doesn’t begin to let us know what will happen with any particular individual. Likewise, it is about what has happened in the past, not what will happen with the new drugs and treatments that are constantly coming along.

That said, if your life expectancy is beyond the period set by the insurance company, or if you don’t know what your life expectancy is, it may still be worthwhile to apply for the accelerated benefit. We have known of many instances where the life insurance company does not look closely at the insured’s health. Instead, these companies merely require proof of a diagnosis and a doctor’s letter that states his or her opinion about your life expectancy.