What is a "living benefit" in insurance?

A "living benefit" in insurance refers to a provision that allows policyholders to access a portion of their death benefit while they are still alive under specific circumstances. This feature is designed to provide financial support to the insured in situations such as terminal illness, chronic illness, or critical health conditions, allowing them to utilize the funds for medical expenses or other financial needs before passing away.

This concept is particularly valuable because it offers additional flexibility and utility from the policy, ensuring that the insured can make use of their benefits during their lifetime, rather than solely after death. Knowledge of living benefits is crucial for understanding how life insurance can serve as a broader financial tool beyond just providing a death benefit.

Other options do not accurately reflect the definition of a living benefit. For instance, features allowing beneficiaries to access benefits after the death of the insured or those describing payouts for critical illnesses do not encapsulate the purpose and function of living benefits as it pertains to accessing death benefits while still alive.