The value of a life insurance Living Benefits Rider

Life insurance provides financial security for dependents in the event of a death. And policy riders allow you to customize your policy to provide additional protection and/or benefits.

Riders offer flexibility, enabling the owners of whole life and other types of permanent life insurance to design a combination of base policies and additional options that best suit their needs. Some riders are automatically included with the insurance policy; others must be requested. Some are included at no additional charge, while others require an additional premium.

What is a life insurance Living Benefits Rider?

The Living Benefits Rider¹ provides an early payout of policy death benefits if the insured is diagnosed to have a life expectancy of 12 months or less. Life insurance with a living benefits rider can help make the insured’s remaining time as comfortable and dignified as possible. It can also help with medical expenses.

Why do you need a Living Benefits Rider?

• Many terminally ill patients are faced with financial hardship at the worst possible time. While the patient may have substantial collateral in a life insurance policy, those funds are technically “off limits” until the policy owner dies.²
• A Living Benefits Rider breaks down the “off limits” fence, enabling the policy owner to access policy proceeds. The amount that can be accessed depends on the type of contract. This payment, which is made to the policy owner rather than to the beneficiary, reduces the cash value that has built up in the policy and reduces the death benefit.

Policy owners can also access funds through a loan or surrender, but it is likely that a life insurance policy with a Living Benefits Rider will provide more money.³ This is because policy loans or surrenders are usually based on cash value, while the amount available from a Living Benefits Rider is generally based on the policy’s face value, paid-up additions, and (if applicable) an amount payable under a rider that provides a level amount of insurance.

Note:

The Living Benefits Rider may be exercised only once. The rider will terminate once a claim for accelerated benefits is made. Exercising this rider will reduce the available cash surrender value and the death benefit of this policy. Receipt of accelerated death benefits may affect eligibility for public assistance programs and may be taxable. You should consult your tax advisor regarding your individual circumstances.

A New York Life Living Benefits Rider can be added to new policies or to most existing policies issued after 1985 for a one-time charge, which is applied when the rider is exercised. The policy owner must choose living benefits coverage, but the rider can be added at any time.

The financial expenses of a terminal illness can be catastrophic, but a Living Benefits Rider can offer some comfort and relief during this difficult time.

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¹Rider benefits can vary by state, and not all riders are available in every state. Your New York Life financial professional can answer any questions you have about a particular rider.

²Various states have established different life expectancy periods once a terminal illness is diagnosed. There are maximum benefit levels set for this rider. A charge is applied when the rider is exercised. Your agent can provide more specific information.

³Accessing cash value will reduce the available cash surrender value and death benefit. 

Rider features may differ based on the insurance product they are purchased with. Riders are available in approved jurisdictions with purchase of an approved product. Not all riders are available in every state, and some states vary the terms of certain riders. Additional limitations and conditions may apply. Please see the product and rider fact sheets for more information. 

In most jurisdictions, the Whole Life policy form number is ICC18217-50P (4/18) and the Living Benefits Rider form number is ICC17217-495R. State variations may apply.