Life insurance is no longer just about a death benefit. With life insurance with living benefits, you can access a portion of your policy while you’re still alive if you face a serious illness, chronic condition, or long-term care need. For many families, that turns life insurance into a flexible protection tool—not just for “what if I die,” but also for “what if I get sick and can’t work or care for myself?”

At Diversified Insurance Brokers, we help clients design policies that protect both their loved ones and their lifestyle. That often means pairing strong death benefit protection with living benefits that can help pay for medical bills, in-home care, lost income, or even college funding if your plan changes. Because we’re independent, we compare multiple carriers and rider options, including plans tailored for

life insurance with pre-existing conditions, so you don’t overpay for benefits you’ll never use.

What Is Life Insurance with Living Benefits?

Life insurance with living benefits is typically a term or permanent policy that includes riders allowing you to access part of the death benefit while you’re alive if certain events occur. Common “triggering events” include:

• A diagnosis of a qualifying critical illness (such as heart attack, stroke, or cancer)
• A chronic illness that leaves you unable to perform a number of
  activities of daily living (ADLs)
• A terminal illness with a limited life expectancy
• Needing help with long-term care–type services on an ongoing basis

Instead of waiting until you pass away, the policy allows you to accelerate a portion of the death benefit to cover today’s expenses. Whatever you use while living is subtracted from the benefit your family would receive later, but it can prevent you from draining savings or taking on debt during a serious health event.

Types of Living Benefits Riders

Living benefits riders come in a few main categories. The exact definitions and triggers vary by company, which is why it’s important to review the illustration and specimen policy carefully.

Terminal Illness Rider

If a doctor certifies that you have a qualifying terminal illness and a limited life expectancy (often 12–24 months), a terminal illness rider may let you accelerate a portion of the death benefit while you’re still alive. Families often use these funds to:

• Pay medical bills and out-of-pocket treatment costs
• Cover travel expenses and time away from work
• Settle debts or put financial affairs in order

Chronic Illness Rider

A chronic illness rider typically activates when you’re unable to perform a set number of ADLs (such as bathing, dressing, eating, transferring, toileting, or continence) or you require substantial supervision due to cognitive impairment. Benefits can be used for:

• In-home caregivers and home health aides
• Assisted living or skilled nursing facilities
• Modifications to your home to make it safer and more accessible

Critical Illness Rider

Critical illness riders provide a lump-sum or monthly benefit if you’re diagnosed with a specific condition listed in the policy, such as heart attack, cancer, or stroke. This can complement or even substitute for standalone critical illness insurance and may be an alternative to

burial insurance for people with health issues when long-term protection is the goal.

Long-Term Care–Style Riders

Some policies include long-term care–style riders that function similarly to
traditional LTC insurance with return of premium. These can provide a monthly benefit if you need extended care, and if you never use them, your family still receives a death benefit.

Not all riders are built the same. Some reimburse actual expenses; others pay a fixed percentage of the death benefit each month regardless of what you spend. Our job is to help you compare options and avoid riders that look great in marketing material but are difficult to use in practice.

Which Policies Offer Living Benefits?

Living benefits can be attached to several types of life insurance:

• Term life with living benefits: Affordable coverage for a set period, sometimes with built-in or optional accelerations for terminal, chronic, or critical illness.
• Universal life and indexed universal life: Flexible permanent policies that can build cash value over time and support multiple riders.
• Whole life insurance: Lifetime coverage with guaranteed cash value and, in some designs, access to rider-based living benefits.

If you’re not sure which structure fits, many families start with a cost-effective term policy and later explore permanent coverage for estate planning, business needs, or legacy goals. Our
term life insurance calculator page can help you estimate how much coverage you may need to protect income, mortgages, and college funding.

Get an Instant Life Insurance Quote

Use our embedded tool to compare term and permanent options from multiple carriers. You’ll see how changing face amounts, riders, and term lengths impacts pricing.

Pros of Life Insurance with Living Benefits

• Money when you need it most: Access a portion of your death benefit if you face a serious illness or lose the ability to care for yourself.
• Protection for both you and your family: Living benefits help with acute or chronic events, while the remaining death benefit supports loved ones.
• Flexible use of funds: Proceeds can typically be used for medical bills, caregiving, travel, debt payoff, or simply keeping your financial plan on track.
• May reduce pressure on savings: Instead of spending down retirement assets, you can tap the policy first and preserve investments for long-term goals.
• Coordination with other plans: Living benefits can complement
  tax-advantaged LTC strategies and other protection layers.

Important Trade-Offs to Consider

While living benefits can be powerful, they aren’t automatically the right fit for everyone. Key considerations include:

• Cost: Some riders are included at little or no cost; others add meaningful ongoing charges. You don’t want to pay for benefits you’re unlikely to use.
• Reduced death benefit: Any living benefits you take now will reduce the amount your beneficiaries receive later.
• Complexity: Trigger definitions, waiting periods, and benefit calculations can be complicated. Oversights here can lead to disappointment when you file a claim.
• Interaction with other coverage: If you already own long-term care coverage or disability insurance, we’ll look at how everything works together before layering on more riders.

For some clients, a standalone LTC or disability policy remains the better fit. For others, adding living benefits to life insurance creates a simple, cost-effective way to address multiple risks in a single contract. We’ll help you compare living benefits alongside standalone options such as

burial insurance and dedicated long-term care plans.

Who Is a Good Candidate for Living Benefits?

Life insurance with living benefits can be especially attractive if you:

• Are in moderate to good health and can qualify for competitive underwriting
• Want to protect against both premature death and serious illness or care needs
• Prefer a single policy structure instead of managing multiple separate contracts
• Are focused on preserving retirement assets and
  
  protecting your funds in retirement
• Have family members who would shoulder caregiving responsibilities without outside help if you became ill

We also see living benefits used in advanced planning for business owners and higher-net-worth families who want to coordinate life insurance with estate planning or legacy strategies. In those cases, we pay close attention to policy design and long-term sustainability.

Underwriting and How to Apply

The application process for life insurance with living benefits is similar to other life policies. Expect:

• Questions about your health history, medications, and lifestyle
• Details about your financial goals and need for coverage
• Depending on age and face amount, a
  
  life insurance exam or, in some cases, an accelerated/no-exam process

If you have pre-existing conditions, we’ll position your application with carriers that are more favorable for your profile and, if appropriate, consider alternative designs such as smaller face amounts layered with other coverage. For families where college funding is part of the plan, we may also coordinate with the specialists at
Diversified College Planning to keep financial aid eligibility in mind.

How Diversified Insurance Brokers Designs These Plans

As an independent, family-owned agency, we don’t push one-size-fits-all products. Instead, we:

• Clarify your priorities: income replacement, debt payoff, long-term care, legacy, or all of the above
• Estimate the right coverage level using tools like our
  
  term life insurance calculator
• Compare multiple carriers and riders for living benefits, LTC-style riders, and cash value growth potential
• Coordinate policy design with any existing coverage (group life, LTC, disability, or annuities)
• Stress-test the plan under different “what if” scenarios so you understand potential outcomes

For some clients, we also discuss how living benefits–equipped life policies can complement strategies described on our

life insurance strategies the wealthy use page, especially when you want both protection and long-term tax-sensitive planning.