New Uses Of Assets - A Living Benefit From Your Life Insurance Policy

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.

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