7 Reasons Every Breadwinner Should Have A Living Benefits Life Insurance

Life insurance is the last gift you give to your family. 

Everybody knows that it is a good idea to protect your family against premature death with life insurance. Do you know that you can protect yourself and your family when you get extremely sick and can’t provide for your family anymore?

Medical Bills are the number 1 reason for bankruptcies.

   Do you know that 2/3 of people filing for bankruptcy are filing because of a major medical bill? If you look around in every major city, hospitals are adding a new wing or have had a major renovation. Business is booming for hospitals.

   Have you heard of Term Life Insurance with Living Benefits?

   With the rates of Terminal, Chronic and Critical illnesses going up and wreaking havoc in a family’s financial situation, in 2014 some life insurance companies decided to add living benefits to their Term Life Insurance, Permanent Insurance, and Annuity products. Most of the insurance companies have added Living Benefits at no additional cost to their clients.

Life Insurance prices have gone lower and lower in the past 10 years

   Even though the chances of getting a debilitating medical condition prematurely has gone up, the chances of expiring prematurely has gone down. 

   So, based on the rate of mortality, the life insurance rates have gone down considerably. If you got life insurance in the past 10 years you might be able to get a better rate than what you currently have and extend the life of your policy too.

   If you already have Term Life Insurance, it is time to look at your life insurance again. You might be saving some money and get the Living Benefits included.

So, what exactly is a Term Life Insurance with Living Benefits?

   Term Life Insurance with Living Benefits it has not only a Death Benefit that will be paid to your beneficiaries in case of death but it has a Living Benefit that will be paid to you in case you get a certain illness or you meet certain criteria in your quality of life because of an injury or an illness. 

   The amount of the Living Benefit is calculated as certain percentages from the Death Benefit and in some policies, it can go to 90%. 

   So, if your life insurance policy has a Death Benefit of 1 Million Dollars, you might be getting $900,000 if your illness meets certain criteria. 

   Every policy is different. They differ based on the amount of the years the policy is in force (usually 10, 20,30, or 35 years), they differ based on the amount of the percentages Living Benefit will pay from the Death Benefit (40% to 90% from the Death Benefit. They differ based on the illness criteria the Living benefit will cover.

The Living Benefit payment is tax free and you can spend it as you want.

   The money that you will receive as a Living Benefit is yours to spend as you please. If you want to go to Vegas and live big for one night you can do that too. Not advisable though :). I hope you will spend that money on finding some alternative treatments and for the future of your family.

   There are life insurance and health insurance companies that will pay reimbursement costs instead of Living Benefits. That money will reimburse you for the cost of your treatment or care. You will get reimbursed only for the treatments that you have received. Pay attention when you are getting a policy.

   Please be aware of the agents that will sell you a reimbursement policy disguised as a Living Benefit Life Insurance. They will compare the pricing of a reimbursement policy to a true Living Benefit Life Insurance and of course they will be cheaper.

“I am pretty healthy and I don’t think I will need life insurance soon”

   If you were to read insurance agents’ forums, you will see story after story of people in their 30’s and 40’s that have said the same thing to their agent and a few months later were calling the agent in tears, asking them if there is any way they can sign up for a life insurance with Living Benefits, because they have received the dreaded diagnostic from their doctor or they had a horrific accident. 

   It is like asking for a car insurance policy after you had a car accident. 

   Most people under the age of 55 believe that they will not pass away prematurely. On the other hand, most people believe that they will develop cancer or other debilitating medical condition in their lifetime. Also, a vast majority believe that they have a pretty big chance to be involved in a major accident that might leave them in the precarious position of not being able to provide for their family.

    Looking at rates of mortality and rates of cancer alone they might be right in both senses. In the USA and Canada people are passing away at an older age than ever in the history of humanity and the trend right now is going higher and higher every year. On the other hand, the chances of developing a critical, chronic or terminal illness has gone up considerably. 

    According to cancer.org the chances of developing cancer during our lifetime is 1 in 2 for males and 1 in 3 for females. The chances of dying of cancer is 1 in 5 for both genders. Add the chances of developing other critical and chronic illnesses or getting into a life-changing accident and you will see that it is a very good idea to have a Living Benefits Life Insurance policy. Heart attacks are causing more deaths than all forms of cancer combined and the risk of a heart attack increases considerably after the age of 45.

   The odds are stacked against us.

   You, as the breadwinner in your household, should not become a burden on your family. 

   Not only that you will not be able to continue to provide for your family but medical bills will pile up and somebody will need to take care of you.

Don't postpone for tomorrow what you can do today. Tomorrow might be too late.

    We don’t mean to scare you into buying life insurance but we see this happening more and more to hard-working families and it is so inexpensive to be insured that we consider it as a no brainer type of deal

   It seems that every month or so, we hear about somebody we know that died in an accident, or had developed multiple sclerosis or cancer and their friends post a gofundme page to help that family. If you are like most people, you will ask yourself:  if that was me, would I suffer the embarrassment of having my friends collect money for my family, or will my family be taken care of, or how much money will they be able to collect? 

   By the next day, you will get busy with what life throws at you and you will forget all about it, until the next time you see a gofundme page on Facebook. Don’t put this off any longer. Tomorrow might be too late to get that Life Insurance with Living Benefits.

Let's get to the Nitty - Gritty of how a Life Insurance with Living Benefits works by answering the most popular questions about it.

Chronic Illness:

   If you have been diagnosed with a chronic illness and will not be able to perform two activities of daily living: bathing, dressing or eating.

Critical Illness:

   Cancer, Heart Attack or a Stroke are considered critical illnesses.

Terminal Illness

   If you develop an illness that has a terminal diagnostic with less than 24 months to live.

   In these 3 cases, you will be able to withdraw a certain percentage of your death benefit based on the policy. On some policies there might be a set amount that you will get paid. Also there might be a different percent for Chronic than for Critical or for Terminal Illnesses. Or for some illnesses might be an annual payment.

   Make sure you read and understand what is covered and for how much. I know the policies are a boring read and they are hard to understand. Ask your agent for help if you need to find what is covered.

   Some insurance companies brag in big bold letters that they will pay 40% while others will pay up to 90%. This is a one time deal. Once you use your accelerated benefit, you can’t use it again for the same policy. 

   Let’s say you have a 1 million dollars policy with a 90% living benefit. You get a terminal illness and get paid $900,000. Your beneficiaries will still get $100,000 when you pass away, as long as you still continue to make the policy payments that will be smaller to reflect the new death benefit.

   Yes. If you want to go to Vegas and play them all, you can :0… Not advisable, but you can. 

   They are your money and you can use them as you please. Don’t forget though the main reason that you took that policy in the first place. It is about you and your family. Try experimental and alternative treatments. Take that vacation that you dreamed of with your spouse. Find your Zen. Invest wisely some of that money to create an annual income for your family. 

   As the federal tax code stands right now, NO. You will not be taxed. Any Living Benefit paid will not be taxed at the federal level. Some states might tax you. Double check with your accountant about that.

   You will make an appointment with a medical assistant that does this every day. The medical assistant will  come to your home or your office, whichever you prefer. He/She will take a mouth swab, pull some blood, get an urine sample, check your blood pressure and ask you some medical questions. The insurance company’s underwriter will also check your medical report from the Medical Insurance Bureau.

   If you are a smoker, or have high cholesterol, or have diabetes, or have high blood pressure, but you are not diagnosed with severe health complications, you will still usually qualify for Life Insurance with Living Benefits, but might have to pay a slightly higher rate for the same policy.

   Yes. We have companies that will write a policy without a medical exam. There are companies that rely only on your medical report from the Medical Information Bureau. We have several companies that you can get a policy through. 

   Now we have a company that has the whole process online and you can get qualified for insurance within minutes. They do not provide yet living benefits, though. It is just a basic Term Life Insurance.  Click here to start the easy process.

    The companies that we represent have the living benefit included in the policy. You will pay the same amount if you have a policy with or without the living benefit.

   There are some companies out there that will charge you more for a Living Benefit. Ask your agent to price the Term Life Insurance with and without the Living Benefit Rider.

   Also there might be an administrative fee when you decide to use the living benefit. This is usually subtracted from the amount of money that you will receive. You will not have to come up with it from your own pocket.

   Getting Term Life Insurance with Living Benefits is also an “insurance” for obtaining Permanent Life Insurance in the future. If you can’t afford to buy permanent life insurance like an Indexed Universal Life Insurance right now, you will probably want to get it in the future when you can afford it. If your health deteriorates, you might not be able to pass a medical exam and you might not be able to get a Permanent Life Insurance.

   If you have a Term Life Insurance in force, you will not need a medical checkup to be able to convert to an Indexed Universal Life Insurance (IUL). With our companies you will be able to convert to a Permanent policy up to age 70. That’s why we consider getting something inexpensive like Term Life Insurance an “insurance “for your future insurability.

   Did you get a life insurance policy before 2014? You have no Living Benefit with your policy. It is time to look at life insurance again.

   Did you get a life insurance policy before 2018? You probably didn’t get the best Living Benefit available for you. Before 2018 there were only a handful of companies that provided Term Live Insurance with Living Benefits and there was barely any competition. It is time to look at life insurance again.

   Mortality rates have been going higher and higher in age and the prices for Term Life Insurance have been going lower and lower.  Take a look at life insurance again.

How Much Insurance Do I Need?

The consensus amongst financial advisors is that the best way to calculate your life insurance needs is with the DIME Formula:

   D – Debt and final expenses. Add up your debts without the mortgage balance. Don’t forget to add your final expenses (funeral costs)

   I- Income. You will have to figure out how many years you will have to have your income replaced. It can be how many years will it take for your youngest child to graduate High School ( You want to make sure that your kids are on their 2 feet in life). Multiply the number of years with your annual income.

   M-Mortgage. The amount you need to pay off your mortgage. Includes any second mortgage that you have.

   E-Education. Estimate how much money will take to pay off your kids’ college. 

   This formula doesn’t take into consideration the liquid assets that you have. You can choose to subtract your liquid assets from the amount that the DIME formula has created for you.

    Once you did the math on how much insurance do you need ask yourself: If I win this amount at the lottery today will I quit working tomorrow and retire? If the answer is NO, then you are not buying enough insurance to cover the economic future of your family.

   The other side of the coin is that you don’t want the monthly payment to become a burden on your monthly budget and cancel the policy in a few months. The best policy you can have is the one that you can afford and that is in effect when you need it.

If you would like to get a quick quote for a Life Insurance with Living Benefits, fill out this form and you will receive the quote within 2 business days in your email. Your information is not sold to other companies, you will get only one quote from an HGI associate. 

Hegemon Group International, LLC. (HGI) is a marketing company offering a vast array of products and services through a network of independent affiliates. HGI does not provide insurance products, real estate, legal or tax advice. In the USA, insurance products offered through Hegemon Financial Group, LLC (HFG); and in California, insurance products offered through Hegemon Insurance Solutions, LLC (California License #0I0198) – collectively HFG. HFG is licensed in all states and the District of Columbia, except Massachusetts. In Canada, insurance products offered through Hegemon Group International of Canada ULC in the provinces in which it is licensed.

Florin Chris Uta is an independent associate of HGI.

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