Using life insurance while alive

A cancer diagnosis upended the family and finances of the Venables. Life insurance helped to keep them solvent and paved the way to a life filled with hope. Learn how those living with a terminal illness can alleviate some financial stress by using their Living Benefits Rider to make withdrawals from their life insurance policies. 

Mike Venable is feeling particularly grateful for all the blessings he has received, both big and small. That’s because he has been living with a rare cancer much longer than anyone could have predicted. It hasn’t been easy. Initially, he and his wife, Jill Tigner, managed to keep up with his medical expenses and their household bills. Eventually, though, they couldn’t keep up any longer. They didn’t know where to turn.

Life insurance before the cancer diagnosis

Like many people, Mike and Jill had assumed their life insurance would benefit their beneficiaries after they were gone. But life insurance can often be an important financial resource before death. In this case, Mike and Jill had opted for the Living Benefits Rider (LBR) in their New York Life policy, then forgot about it. The rider allows policy owners with terminal illnesses to access their death benefits while the insured is still living.

Fortunately, a few years after Mike’s diagnosis, he and Jill met with their local financial professional, Jeff Hudson, for a routine review of Mike’s New York Life policy. Hudson knew his client was ill, but he didn’t realize just how dire Mike and Jill’s financial situation had become.

Jeff reminded the couple of their decision, which had seemed minor at the time, to add the LBR at no cost. Mike and Jill were stunned and relieved to learn they could tap into Mike’s death benefit. Suddenly, they were able to manage their expenses. “I had no idea that [the LBR] could have such an impact on somebody’s life,” Jeff said.

How to use life insurance while alive

The Living Benefits Rider is a feature that you can add to your life insurance to give you the option to access a portion of the death benefit while the insured is still alive if they are diagnosed with a terminal illness with a life expectancy of 12 months or less. The rider can give you financial support during times of serious illness, critical medical conditions, or other specified events.

To use the rider, you should review your life insurance policy to familiarize yourself with the specific details and conditions of the Living Benefits Rider, such as eligibility requirements, types of qualifying events, and any limitations or exclusions mentioned in the policy.

If you’re eligible, your next step will be to contact your insurance company and inform it of your intent to exercise the Living Benefits Rider. Company representatives will walk you through the process and make sure you file the required claim forms. Be prepared to provide documentation, such as medical reports and test results, to support your claim.

The insurance company will evaluate your claim based on the information you provide. (It may require an assessment by an independent medical professional to confirm your condition.) The duration of the approval process may vary depending on the complexity of your claim and the insurance company’s policies.

If your claim is approved, you will receive a payout from your life insurance policy’s death benefit. The amount you can access depends on your policy’s terms, and the amount you access will reduce the remaining death benefit and available cash surrender value. It’s important to note that the payout may be subject to certain fees and taxes, so work with your New York Life financial professional to understand the potential impact.

Adding a Living Benefits Rider can be a lifesaver

The Living Benefits Rider provided more than financial relief. “I noticed a change in Mike’s tone, his emotional state,” said Andrew Pippas, Mike’s oncologist and friend. “It’s been a great thing for him and Jill, just to focus on getting well and not worry about finances.”

Mike agreed. “This New York Life experience opened our lives back up. We can now spend more energy on love and purpose, and less on fear and anxiety.”

“My approach is holistic,” Jeff Hudson said, adding that he always recommends that his clients opt for the Living Benefits Rider. “We don’t assume the worst is going to happen, but life changes.”

Mike completed his expensive treatment, and he and Jill continued to work at their small business in the Chattahoochee Valley of Central Georgia. Mike has lived to see many family milestones. And he and Jill recently reached a milestone Mike didn’t think he’d live to see: retirement. “We are living in a very joyful place, and New York Life has been a key ingredient in that joy,” Mike said.

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The experience of the people described in this material may not be representative of the experiences of other clients. Experiences obtained by these people are not indicative of the future experiences that may be obtained. Certain conditions must be met to exercise policy riders. Receipt of accelerated death benefits may affect eligibility for public assistance programs and may be taxable. You should consult your tax advisor regarding your circumstances.  

In Oregon, the Whole Life policy form number is ICC18217-50P (4/18). The Living Benefits Rider form number is ICC17217-495R. SMRU 1820364