What are life insurance living benefits?

Justin Sonon • August 19, 2024

What do living benefits include?

Life insurance living benefits refer to features or options within a life insurance policy that allow the policyholder to access a portion of the death benefit while they are still alive. These benefits are typically triggered by specific events or circumstances, such as a critical illness, chronic illness, or terminal illness. Here are some common types of living benefits:

1. Accelerated Death Benefit (ADB):

- This benefit allows the policyholder to receive a portion of the death benefit early if they are diagnosed with a terminal illness and have a life expectancy of typically 12 to 24 months or less. The amount received reduces the death benefit that will be paid to beneficiaries after the policyholder's death.

2. Critical Illness Rider:

- A critical illness rider provides a lump-sum payment if the policyholder is diagnosed with a critical illness such as cancer, heart attack, stroke, or other specified serious conditions. This payment can be used for medical expenses, living costs, or any other needs.

3. Chronic Illness Rider:

- This rider allows the policyholder to access a portion of the death benefit if they are unable to perform a certain number of activities of daily living (ADLs) such as bathing, dressing, or eating, or if they require substantial supervision due to cognitive impairment.

Living benefits can provide financial flexibility and support during difficult times, offering peace of mind that funds are available to cover significant expenses or to maintain a certain quality of life. However, accessing these benefits usually reduces the death benefit available to beneficiaries.

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Navigating the Medicare Prescription Drug Spending Cap

By Justin Sonon • February 12, 2025

Starting in 2025, Medicare is introducing a new $2,000 out-of-pocket cap on prescription drug spending for enrollees in Medicare Part D. This cap is a result of the Inflation Reduction Act and is designed to limit the financial burden of high-cost medications. How It Works: 1. Annual Out-of-Pocket Cap: Once your total out-of-pocket spending on Part D drugs reaches $2,000, you won’t have to pay anything more for covered prescriptions for the rest of the year. This replaces the current system, which has a catastrophic phase where patients still pay a percentage of drug costs. 2. Monthly Payment Plan (New Option): Medicare will offer an option to spread out drug costs over the year rather than paying large sums at once. This can help enrollees manage expenses more predictably. 3. Who Benefits the Most? Beneficiaries with high prescription drug costs—especially those taking expensive specialty medications. Anyone who previously spent more than $2,000 annually on prescriptions. 4. How to Prepare for 2025: Review your current Part D or Medicare Advantage plan to see how it covers your medications. Look into enrollment options for the new monthly payment plan if you prefer spreading costs over time. Stay updated with your plan provider on any changes in premiums, formularies, and copays. 5. Does using GoodRx count towards the spending cap? No. In order to reach your spending cap, you must only use your Medicare prescription drug plan.