Living Benefits

Background

One way to fund long-term services and supports Also known as Long-term Care (LTC), LTSS encompass a broad range of assistance needed by people of all ages who have cognitive or mental impairments and who may lack the physical ability to function independently.  In their basic form, LTSS consist of help with self-care and… ( LTSS Also known as Long-term Care (LTC), LTSS encompass a broad range of assistance needed by people of all ages who have cognitive or mental impairments and who may lack the physical ability to function independently.  In their basic form, LTSS consist of help with self-care and… ) is to adapt or combine coverage with existing life insurance coverage. Unlike long-term care insurance, which younger people are not always inclined to purchase, life insurance products are more common among younger adults. People with life insurance policies can sometimes convert some or all to a living benefit ( accelerated death benefits A provision of a life insurance policy under which the insurer pays a portion of the life insurance benefit to the policyholder instead of paying the beneficiary at the policyholder’s death. Also called a "living benefit." and viatical settlement agreements), which can be used to help people with life insurance policies pay for LTSS Also known as Long-term Care (LTC), LTSS encompass a broad range of assistance needed by people of all ages who have cognitive or mental impairments and who may lack the physical ability to function independently.  In their basic form, LTSS consist of help with self-care and… .

Accelerated death benefits A provision of a life insurance policy under which the insurer pays a portion of the life insurance benefit to the policyholder instead of paying the beneficiary at the policyholder’s death. Also called a "living benefit." allow policyholders to access benefits before death in the case of a terminal illness, a catastrophic illness or accident, or a need for LTSS Also known as Long-term Care (LTC), LTSS encompass a broad range of assistance needed by people of all ages who have cognitive or mental impairments and who may lack the physical ability to function independently.  In their basic form, LTSS consist of help with self-care and… . These benefits may be a feature of an existing life insurance policy or sold separately as a rider. Payouts are typically a percentage of the policy’s face value, up to 80 percent. These benefits may not be available for people with preexisting conditions, and payouts of accelerated benefits will reduce the amount available to beneficiaries when the policyholder dies.

People who are terminally ill or who no longer wish to keep a life insurance policy may have the option to sell their policy to a life settlement or viatical settlement company for an immediate payout. Recently the market for such settlements has expanded to include terminally ill people with longer life expectancies and even healthy older adults. People with longer life expectancies typically receive a smaller percentage of the face value of the policy (see also Chapter 11, Financial Services and Consumer  Products - Financial Services—Investment and Securities Industry).

LIVING BENEFITS: Policy

Ensuring consumer protections

In this policy: State

States should regulate accelerated death, life settlement, and viatical settlement benefits to ensure that consumers receive full disclosure of information about the advantages and disadvantages of accelerating benefits. They should also ensure that consumers receive fair actuarial compensation for the value of their life insurance.