Living Benefits Rider

Policy riders are options that can be added to a life insurance policy (some at additional cost) to provide additional protection or benefits¹ customized to your needs. Here we explain how the Living Benefits Rider works.

The Living Benefits Rider is one type of policy rider that allows the policyowner to collect the policy death benefits while they are still living, but have been diagnosed with a terminal illness.² It can help make the insured's remaining time as comfortable as possible or even pay for life saving treatment (link to Maloney video).

With the escalating costs of medical bills, too many terminally ill patients are faced with financial hardship during the worst possible time. Meeting these bills becomes yet another struggle to endure. The sad thing is that a patient may actually have substantial life insurance policies, but cannot access those funds since they are “off limits” until his/her death.

The Living Benefits Rider breaks through the "off limits" fence. With this rider, the policyowner can access from 25% to 100% of eligible policy proceeds, up to $250,000. This payment — which is made to the policyowner rather than the beneficiary³ — reduces the cash value and death.

Although policyowners in this situation can also access funds through a policy loan or by surrendering their policy, in most cases, the Living Benefits Rider may provide more funds than either of these options. This is because policy loans or surrenders are usually based on cash value accumulated on the policy, while the amount available from the Living Benefits Rider is generally based on the policy's face value, any additional insurance added onto the policy, and (if applicable) an amount payable under a rider that provides a level amount of insurance.

Ride for free
This rider can be added to new or existing policies⁴ at the policyowner’s request (if issued after 1985), at no additional charge. There are, however, some exceptions. In addition, a one-time administrative fee is assessed if the Living Benefits rider is exercised. The policyowner elects living benefits coverage and can choose to do so at anytime. The policyowner can even elect living benefits coverage at the same time that he/she furnishes New York Life with medical proof that a terminal illness exists.

For more information about the Living Benefits Rider, its benefits and certain restrictions and limitations, talk to a New York Life agent.

¹ The proceeds available are adjusted to reflect the time value of money; therefore, the amount paid is slightly discounted.
² Medical proof that the insured has twelve months or fewer to live (six in Michigan) is required.
³ Benefit is subject to the approval of any policy assignees or irrevocable beneficiaries.
⁴ Not available in every state, and not available with all New York Life products. Please consult a local New York Life agent for complete details.