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Living benefits let you use part of your life insurance while you’re still alive if you’re diagnosed with a qualifying serious illness. They aren’t a separate kind of policy but a feature, often an add-on (insurance companies may call it a rider), that some term, whole, universal, and final expense policies include or offer. Not every policy has them.
As a family-owned independent agency, CBIS compares how different insurance companies handle them. We’re based in Santee, serving San Diego County, and helping people across California by phone or video.
Already have a policy? We’ll review any life insurance policy you have, free, and tell you honestly if it still fits. Get a free policy review →
What Are Living Benefits?
Most living benefits fall into a few types. Each policy defines exactly what qualifies, so details vary.
Terminal illness
If a doctor certifies that your life expectancy is limited, often to 12 or 24 months depending on the policy, you may be able to use a large part of your coverage early.
Chronic illness
If you can’t do basic daily tasks on your own, such as bathing or dressing, or you have a severe memory condition, some policies let you use part of your coverage, often in yearly or monthly amounts.
Critical illness
If you’re diagnosed with a serious condition the policy names, such as certain heart attacks, strokes, or cancers, you may be able to use part of your coverage.
Critical injury (some policies)
A few policies also cover serious injuries, such as paralysis or a major brain injury, as the policy defines them.
Chronic Illness Benefit vs Long‑Term Care
They can sound alike, but they aren’t the same.
Part of a life policy
Chronic illness benefit
- Lets you use some of your life insurance coverage early if you qualify.
- Whatever you use comes out of the payout your loved ones would get.
Good to know: it isn’t long-term care insurance, and it may not pay for care the same way.
A separate kind of coverage
Long‑term care insurance
- Built specifically to help pay for care at home, in assisted living, or in a nursing home.
- Its benefits don’t come out of a life insurance payout.
Good to know: some life policies offer a separate long-term care add-on, which works differently from a chronic illness benefit.
How it can help, in real life:
- Heart attack, months off work: if it meets the policy’s definition, help with the mortgage.
- Terminal diagnosis: if it meets the policy’s definition, money for care and time with family.
- Can’t dress or bathe alone: if it meets the policy’s definition, help paying a caregiver.
Before you count on it
What to Know Before You Use Living Benefits
Real help, with real trade‑offs
Living benefits can make a hard time easier. Here’s what to weigh first.
- It lowers the payoutWhatever you use now lowers what your loved ones receive later. Some insurance companies also charge a fee or reduce the amount when you use it.
- It varies by policyWhich illnesses qualify, how much you can use, and any cost all vary by policy and insurance company.
- Taxes and public benefitsMoney you receive may affect your taxes, and critical illness payments may be treated differently than terminal or chronic illness payments. Talk with a tax professional before you use it. It may also affect eligibility for public benefits like Medi-Cal.
Good to know: not every policy includes living benefits, and you’ll usually need records from your doctor to qualify.
Compare the types of life insurance →
What Affects the Cost of Living Benefits?
Some policies include living benefits at no extra monthly cost. Others charge for them as an add-on. Factors include:
- The type of policy: term, whole, universal, or final expense
- Your age and health
- Nicotine use, including vaping
- The coverage amount
- Whether living benefits are built in or cost extra
- How the insurance company figures the amount when you use it
Prices depend mostly on your age, your health, and the amount of coverage. Ask us for a free side-by-side comparison of policies, including how each one handles living benefits.
Are Living Benefits Worth Having?
They’re often worth asking about when a serious illness would strain your budget. They may matter most if:
- Your household depends on your paycheck
- You have a mortgage or rent that would be hard to keep up with during treatment
- You have little sick leave or disability coverage through work
- You want your coverage to be able to help during your life, not only after
Living benefits are available on some term life, mortgage protection, whole life, universal life, and final expense policies.
Want to see which policies include living benefits?
We’ll compare options from many insurance companies and walk you through what each one covers.
How to Get Life Insurance with Living Benefits
No payment required to apply.
You pay nothing until you accept an offer.
- ApplyTell a licensed CBIS agent you want living benefits, and we’ll focus on policies that include them.
- The insurance company reviews your applicationThey review your health and history to decide whether to offer coverage.
- Get your offerIf approved, you’ll see your price and which living benefits the policy includes.
- Make it fit your budgetAdjust the coverage amount and length until the monthly cost fits your budget.
- Accept, then payPay only after you accept. Nothing is due up front.
Want more detail on each step? See the full steps on our quote page.
Living Benefits Questions
How do living benefits work?
If you’re diagnosed with a condition your policy covers, you file a claim with the insurance company, usually with your doctor’s records. If it qualifies, they pay part of your coverage to you while you’re alive. You can usually use the money however you need. Whatever coverage is left goes to your loved ones later.
How much would I actually get if I used a living benefit?
Possibly less than the amount taken off your coverage. When there’s no extra charge for the add-on, many insurance companies pay a discounted amount when you use it. What you’d receive depends on the policy, your age and health at the time, and how much you take. Ask us to show you how a policy figures it before you buy.
Is life insurance with living benefits worth it?
It can be, because it gives your coverage a way to help during a serious illness, not only after death. The trade-offs: using it lowers the payout to your loved ones, the rules for qualifying can be strict, and some versions cost extra. We’ll lay out the pros and cons of the policies you’re considering.
Do living benefits cost extra?
It depends. Some policies include them at no added monthly cost, and others charge for them as an add-on. We’ll show you how each policy handles this.
Do term and whole life policies both offer living benefits?
Many do, but not all. What’s included differs from one insurance company and policy to the next, so we check the details for each option.
Does final expense insurance have living benefits?
Some final expense policies do. Many include an add-on for terminal illness, and some offer chronic or critical illness benefits. Not every policy has them. See our final expense insurance page for more.
Can I add living benefits to a policy I already have?
Usually not. Living benefits generally have to be included when the policy is issued. Some insurance companies allow adding them later, but it’s uncommon. We can check your current policy and tell you what it includes.
Will using a living benefit affect my taxes or Medi‑Cal?
It might. Money from living benefits is often not taxed as income, but that depends on the type of benefit, the amount, and your situation, and critical illness payments may be treated differently than terminal or chronic illness payments. Talk with a tax professional before you use it. It can also affect eligibility for needs-based programs like Medi-Cal, so check with a benefits advisor if you receive public benefits.
Want living benefits on your coverage?
CBIS has helped families since 1982. Talk with a licensed agent by phone or video call.
Other questions? Contact us.