We think of life insurance as a risk management tool designed to take care of our families in the event of our deaths. But what happens if you become seriously ill and rack up big medical expenses that aren’t covered by your health insurance? How will you pay your bills if you get sick for an extended period of time and are unable to work? How will you avoid financial hardship if you’re diagnosed with a chronic illness and have to pay for medication out of pocket?

Life can quickly go sideways on you, and if you’re not prepared it can create crushing debt.

What should you do? How do you avoid the worst-case scenario?

If you’re buying a term life insurance policy, you should consider choosing one that has living benefits. Living benefits give you the flexibility to receive an advanced payment on the policy’s death benefit in order to cover certain expenses during your lifetime.

A typical living benefit rider on a term life insurance policy could cover things like:

Terminal illness.

If a doctor diagnoses you with a terminal illness and a life expectancy within the threshold defined by the policy, your insurance could pay out a percentage of the full benefit while you’re still alive. This money could be used to pay every day expenses and medical bills.

Critical illness.

If you have a major medical event like a heart attack, stroke, or cancer diagnosis, the policy could pay out a defined percentage of its death benefit

Chronic illness.

If you cannot perform 2 out of 6 "activities of daily living" for an extended period of time due to heart disease, stroke or other illness, you may be able to accelerate part the death benefit.  These funds can be used for medical care or lost income of a family member who stays home to care for you.

Don’t be caught off guard. Making sure you have enough life insurance not only includes taking care of your loved ones in the event of your death. It also means having a policy that can prevent devastating financial hardship if you become chronically, critically, or terminally ill.

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