Compelling Reasons Every Breadwinner Should Have A Living Benefits Life Insurance

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

Life insurance is an invaluable gift to secure your family’s future. While most people understand the importance of protecting their loved ones against their premature death, many are unaware that life insurance can now provide critical support in the event of serious illness or disability when you can’t provide for your family anymore or, even worse, you become a burden to your family.

In this page, we will explore the significance of living benefits life insurance for breadwinners, highlighting seven compelling reasons to consider this essential coverage.

Medical Bills Are the Number 1 Reason for Bankruptcies

Medical expenses often lead to bankruptcy, with two-thirds of bankruptcy filings coming from overwhelming medical bills. If you look around in every major city, hospitals are adding a new wing or have had a major renovation. The healthcare industry is booming.

Fortunately, there’s a solution: Term Life Insurance with Living Benefits. To address the rising rates of terminal, chronic, and critical illnesses, life insurance companies began including living benefits in their Term Life Insurance, Permanent Insurance, and Annuity products as early as 2014. What’s more, many insurance providers now offer Living Benefits at no additional cost to their clients.

Life Insurance Prices Have Gone Lower and Lower in the Past 10 Years

Over the past decade, life insurance premiums have consistently decreased. While the likelihood of experiencing a debilitating medical condition prematurely has risen, the chances of early mortality have declined. Also, many more people have realized that life insurance is one of the best ways to protect their families and have signed up for it. With a bigger pool of people and a lower mortality rate, life insurance rates have become significantly more affordable. 

If you already have Term Life Insurance, it’s worth reevaluating your policy to potentially save money and benefit from the inclusion of Living Benefits.

So, What Exactly Is a Term Life Insurance With Living Benefits?

So, what exactly is Term Life Insurance with Living Benefits? In addition to the traditional Death Benefit payable to your beneficiaries upon your passing, this type of insurance also offers a Living Benefit that you are covered for when you are alive, thus the term Living Benefit.  

If you develop a specified illness or meet certain quality-of-life criteria due to an injury or illness, you become eligible to receive Living Benefits. The amount you receive is calculated as a percentage of the Death Benefit, with some policies providing up to 90% of the total Death Benefit. 

For instance, if your policy has a $1 million Death Benefit, you could receive $900,000 if your illness meets the criteria. Keep in mind that each policy varies in terms of duration (typically 10, 20, 30, or 35 years), the percentage of Living Benefit paid (ranging from 40% to 90% of the Death Benefit), and the covered illness criteria. Once you receive the Living Benefit the policy is terminated. 

The Living Benefit Payment Is Tax Free and You Can Spend It as You Want

The living benefits payout is tax-free, allowing you to utilize the funds as you see fit. While it may be tempting to splurge, spending the money wisely on alternative treatments and securing a better future for your family is advisable.  

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. This is not the same as getting Living Benefits. Pay close attention when you are getting a policy.

Please be aware that the agents are selling you a reimbursement policy disguised as living benefits life insurance. They will compare the pricing of a reimbursement policy to a true Living Benefits Life Insurance, and of course, they will be cheaper.

“I Am Pretty Healthy and I Don’t Think I Will Need Life Insurance Soon”

You might think you’re healthy and don’t require life insurance in the near future. However, numerous posts on insurance agents’ forums recount stories of individuals in their 30s and 40s who initially believed the same but were later devastated by a severe health diagnosis or a catastrophic accident. Most of these stories end with these agents feeling sorry that they didn’t push harder for these families to get coverage.  

Waiting until a life-altering event occurs before seeking life insurance is akin to acquiring car insurance after having an accident

While most individuals under 55 don’t expect to pass away prematurely, they do anticipate the possibility of developing cancer or other debilitating medical conditions. Moreover, many recognize the potential for a significant accident that could render them unable to provide for their family.

When examining mortality and cancer rates, it becomes evident that the odds are against us. People in the USA and Canada are living longer than ever before, but the chances of developing critical, chronic, or terminal illnesses have substantially increased. According to, the lifetime probability of developing cancer is 1 in 2 for males and 1 in 3 for females, with a 1 in 5 chance of dying from cancer for both genders. When factoring in other critical and chronic illnesses, along with life-changing accidents, it becomes clear that having a Life Insurance policy with Living Benefits is an excellent idea. Heart attacks alone account for more deaths than all forms of cancer combined, and the risk of a heart attack significantly rises 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 in some cases, 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 these heartbreaking scenarios happening more and more to hard-working families. It is so inexpensive to be insured that we consider this a no-brainer type of deal from a financial planning standpoint. No ifs, no buts; you have the moral obligation to protect the future of your family. 

It seems that every month or so, we hear about somebody we know who 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 they will be able to collect.

Reading this page, you know that you need to take action and protect your family but by the tomorrow 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 from one of your friends on Facebook. Don’t put this off any longer. Tomorrow, it might be too late to get that coverage for 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 that has 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, but make time to  understand what is covered.

   Some insurance companies brag in big bold letters that they will pay 40% of your death benefit 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 80% living benefit. You get a terminal illness and get paid $800,000. 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 all of them, you can :0… Not advisable, but you can.

   Unlike a reimbursement policy that will pay for your treatments alone, the living benefits policy will cut a check to you for the full amount. 

   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 for your ailment. 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.

Now, you can get Life insurance with Living benefits without a medical checkup. The  underwriter will check your medical report from the Medical Insurance and base on that, they will make a decision. 


   Yes. We have companies that will write a policy without a medical exam. There are companies that rely on your medical report from the Medical Information Bureau, your meds history, driving history and credit report to make a decision. We have several companies that you can get a policy through. 


    The companies that we represent have the living benefit included in the policy. For most of the policies 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. 

   Also, there might be a small administrative fee when you decide to use the living benefit when you get sick. 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. The policy will state what is the amount that will have to pay or if there is no fee.


   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 save money through a permanent life insurance like an Indexed Universal Life Insurance right now, you will probably want to 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) in the future. With our partner’s 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. There was no Living Benefits before 2014. 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. You might be surprised how inexpensive it has become. 

Do you have life insurance that is tied to your mortgage? Does the death benefit goes to your beneficiaries or it goes to your mortgage company?  You can probably get a lot better terms by getting a regular life insurance with a Living Benefit. 

How Much Insurance Do I Need?

Benefits Works by Answering the Most Popular Questions About It

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 it will take for your youngest child to graduate High School or college or any other mile mark in their life ( You want to ensure that your kids are independent 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 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 also is in effect when you need it.

For a free 1/2 hour consultation or to request several illustrations based on your situation, go to bookings.



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Last updated: [8/17/2023]

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