3 Little-Known Perks of Life Insurance

Anyone considering buying life insurance should read this to find out about its many benefits.

Most people purchase life insurance because they want to make sure a death benefit is available to provide for their loved ones in case of their untimely death. But life insurance can also have some other perks beyond the death benefit. It's worth considering whether to take advantage of these other benefits.

Here are some little-known perks of life insurance many people may not be aware of but should think about when buying coverage.

1. Coverage for terminal illnesses

Many life insurance policies offer living benefits as a standard option with term and whole life coverage. It's also possible to purchase these benefits as an add-on.

Living benefits allow the policyholder to receive some of the death benefit while still alive after being diagnosed with a terminal illness. This can provide policyholder's with an important source of income to help cover medical bills and other costs that can arise when facing a serious illness.

Although the details can vary from policy to policy, it's common for living benefits to become available to a policyholder whose life expectancy is around a year or less. Since many people with a terminal illness can no longer work but still need money to cover their costs, this perk of life insurance can be invaluable. Typically, however, it results in a reduction of the death benefit that will be paid out, so it's a good idea to understand how claiming it will impact the money loved ones receive after a death.

2. Add-on disability coverage

Many life insurance premiums offer disability riders that will enable the policyholder to receive some of their money in the event they become disabled. This rider usually comes at an added cost, but can be more convenient and less expensive than buying a standalone disability benefits policy.

Life insurers call their disability benefits riders by different names. Sometimes, they are referred to as chronic illness riders or as critical illness riders. They usually begin offering funds to the policyholder in the event of a diagnosis of invasive cancer, heart attack, stroke, or similar serious medical condition. Again, depending on policy terms, this can affect the death benefit.

3. Long-term care coverage

Long-term care riders are also available with many life insurance policies as well. Again, these can come at an added cost, but may be able to be added to a life insurance policy more easily (and for less expense) than purchasing a separate long-term care policy.

Since long-term care is expensive, and seniors 65 and over face as much as a 70% chance of requiring some type of long-term care over the course of their lives, a life insurance long-term care rider could be a very important source of financial protection.

In many cases, using the long-term care coverage does reduce the death benefit that is paid out, just as with the other types of perks on this list. As always, it's important to understand the specifics of how this rider works and make sure that a sufficient amount of money is still available to surviving loved ones after passing away.

Each of these three perks of life insurance can offer valuable additional coverage to policyholders that many people may not be aware of. When buying life insurance, it's worth considering whether these added protections could be important in case things go wrong.