What are living benefits in a life insurance policy?

What are living benefits in a life insurance policy?

• A. Provisions for beneficiaries after policyholder’s death
• B. Access to a portion of death benefit while alive
• C. Increased premiums during severe illness
• D. Options for policyholders to borrow against insurance

Answer: (B)

Living benefits in a life insurance policy refer to the provision that allows the policyholder to access a portion of the death benefit while they are still alive, particularly in case of terminal illness, chronic illness, or critical illness. This feature is designed to provide financial support during challenging times, enabling policyholders to cover medical expenses, pay for long-term care, or manage other financial burdens associated with their condition. This option highlights the proactive financial support that a living benefit can offer, as it is intended to assist individuals while they are facing significant health challenges, rather than solely providing benefits after death. By having this access to funds, insured individuals can better manage their healthcare needs and other expenses that might arise. The other choices do not accurately represent the concept of living benefits in the same way. For instance, benefits for beneficiaries after the policyholder’s death pertain to the death benefit aspect, which is distinct from living benefits. Increased premiums during severe illness does not reflect the purpose of living benefits but instead relates to the financial implications of health changes on a policyholder. Borrowing against insurance may be a feature in some life policies but does not capture the essence of living benefits, which specifically provide access to funds based on the insured's current health status.

Living benefits in a life insurance policy refer to the provision that allows the policyholder to access a portion of the death benefit while they are still alive, particularly in case of terminal illness, chronic illness, or critical illness. This feature is designed to provide financial support during challenging times, enabling policyholders to cover medical expenses, pay for long-term care, or manage other financial burdens associated with their condition.

This option highlights the proactive financial support that a living benefit can offer, as it is intended to assist individuals while they are facing significant health challenges, rather than solely providing benefits after death. By having this access to funds, insured individuals can better manage their healthcare needs and other expenses that might arise.

The other choices do not accurately represent the concept of living benefits in the same way. For instance, benefits for beneficiaries after the policyholder’s death pertain to the death benefit aspect, which is distinct from living benefits. Increased premiums during severe illness does not reflect the purpose of living benefits but instead relates to the financial implications of health changes on a policyholder. Borrowing against insurance may be a feature in some life policies but does not capture the essence of living benefits, which specifically provide access to funds based on the insured's current health status.