Life is unpredictable. Just ask Elena Lubenets, a life insurance benefits broker and owner of The Life Insurance Empire. For the last eight years, she has heard first-hand accounts from clients whose lives changed after getting a cancer diagnosis, suffering a fall while vacationing in Germany or twisting an ankle after jumping out of an airplane. Although these unpredictable events landed her clients in a medical facility, not one of them landed in debt. That’s because Elena’s clients had life insurance policies that helped with medical expenses while they were still alive.
Most people think of life insurance as financial protection for loved ones after the policy holder's death. But some types of insurance, known as living benefits, allow you to access part of your policy if you’re experiencing certain medical conditions.
“You can use the money on anything” Elena explains. “It’s cash directly to you.”
Some types of living benefits include:
1. Chronic Illness Benefit – offers access to part of your life insurance payout if you can’t perform basic daily activities like eating, bathing or dressing because of a chronic illness.
2. Critical Illness Benefit – may allow you to withdraw money to help with medical bills, treatments and lifestyle adjustments If you're diagnosed with a serious illness such as cancer, heart attack or stroke.
3. Terminal Illness Benefit – may entitle you to an advance life insurance payment if you’re diagnosed with a terminal illness with a limited life expectancy of usually 12 to 24 months.
4. Long-Term Care Benefit – is a long-term care rider that lets you use part of the death benefit to pay for assisted living, home care or nursing home expenses.
5. Cash Value Access – is a permanent life insurance policy that builds cash value over time. You can borrow or withdraw from its cash value for emergencies, retirement or educational costs while you're alive.
“My colleague wrote a life insurance policy for a 35-year-old female for $350,000 just 10 months ago,” shares Elena. “She was just diagnosed with breast cancer. My colleague just delivered a check to her for $135,000. She doesn’t have to worry about not being able to work. It took the burden off of her so she can focus on her cancer treatment.”
Living benefits aren’t the only unique insurance policies available. Policies like Hospital Indemnity and Travel Indemnity can also help ease financial burdens.
Hospital Indemnity Insurance is used to supplement health insurance and can cover expenses like deductibles, copays and additional expenses that aren’t paid for by health insurance.
Medical travel insurance can protect you if you become ill or injured while traveling outside of the country. It covers emergency medical visits, prescriptions or doctor’s visits.
Elena, who serves as president of the central Ohio chapter of National Association of Insurance and Financial Advisors (NAIFA), offers the following tips:
1. Be honest. Insurance companies have access to a database that collects medical records that help insurance agencies assess risk and liability. If the medical information you provided isn’t consistent with your health records in the database, your beneficiary may not get the benefit amount. Instead, they will receive a refund of all the premiums paid toward the policy plus 10 percent to cover interest. According to Elena, it could be the difference between half a million dollars to only a couple thousand dollars.
2. Purchase the policy before getting a medical diagnosis. The cost of a life insurance policy is locked in at the time of purchase. If you purchase a policy after a diagnosis, your risk increases, causing your premiums to rise.
3. Life events like marriage, divorce, birth, death and retirement are all good reasons to change your beneficiary. Elena recommends reviewing your policy after major life events.
4. Review all your policies twice a year when you change your clocks. Daylight Savings can serve as a reminder to also look over your policies and make any changes.
5. Store your policies in a safe place and let your beneficiary know how to access them.
Everyone needs life insurance, says Elena. Healthy people often think they don’t need it, but they could get into an accident at any moment. Life insurance relieves the burden on the family to help with medical or burial expenses.
“You have a choice,” she says, “do you want to leave your family with a burden or a legacy?”
“You have a choice. Do you want to leave your family with a burden or a legacy?” - Elena Lubenets, The Life Insurance Empire