What are living benefits on a life insurance policy?
Direct Life Advisors is an independent life insurance agency, not an insurance company, and is not affiliated with any insurer mentioned here.
A living benefit lets the insured person draw part of the death benefit while still alive, on a triggering event named in the contract — commonly a terminal illness, a chronic illness, or a critical illness.
The money is not extra. It is the death benefit, paid early, and what is drawn is subtracted from what the family receives later.
Talk it through with a licensed agent.
Fifteen minutes, no charge — we'll tell you which product your answers qualify for and what it costs, across several carriers at once.
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The three riders and what triggers each
Terminal illness. The trigger is a physician's certification that life expectancy is below a stated period — commonly twelve or twenty-four months, set by the contract. This is the most widely included rider and the most straightforward.
Chronic illness. The trigger is an inability to perform a stated number of activities of daily living, or a severe cognitive impairment, certified by a licensed health practitioner. The list of activities is written into the contract.
Critical illness. The trigger is a diagnosis from a list the contract names — heart attack, stroke, specified cancers and so on. What is on the list, and how each item is defined, varies between carriers more than any other part of this.
The questions that decide what a rider is worth
Riders with the same name behave differently between carriers. These five questions separate them:
- What exactly triggers it, in the contract's own words?
- How much of the death benefit can be drawn, as a share and as a dollar cap?
- Is there a separate charge for the rider, or is it included?
- Is the amount paid reduced by a discount or interest charge for early payment?
- What does drawing on it do to the remaining death benefit and to the premium?
Question four catches people out. On many contracts the early payment is discounted, so drawing half the death benefit early yields less than half of it in cash.
What the coverage has to cover
The National Funeral Directors Association's 2023 General Price List Study, released 8 December 2023, put the median funeral with viewing and burial at $8,300 and a cremation with viewing at $6,280. Neither figure includes the cemetery plot, the grave marker, or cash-advance items such as flowers and the obituary, and both are 2023 figures. NFDA news release, 8 December 2023.
A separate NFDA publication, its 2025 Cremation & Burial Report, puts the US cremation rate at 63.4%. That report is sold rather than published in full, so the figure is quoted from it and is not linked here.
Set a death benefit against those two figures and the arithmetic does the arguing. A $10,000 policy covers a cremation with money left over; it covers a burial only until the plot and the marker are added. That is the number worth deciding first, because everything else on this page is priced against it.
Read it against your own policy
If you already hold a policy, there is a reasonable chance it carries at least one of these riders and nobody has mentioned it. They are frequently included at no separate charge and go unused because the policyholder does not know the provision exists.
Bring the policy to the phone and we will read the rider section with you, in the contract's language, and tell you what triggers it.
Talk to someone independent
Direct Life Advisors is an independent agency with 52 carrier relationships. A licensed agent will read the contract with you — the product name, the face amount, and whether a limited benefit period applies — and tell you what it means. At no charge to you. We're paid a commission by the insurance company only if you later buy through us — never by you.