What is a "living benefit"?

A living benefit refers to payments or advantages provided to a policyholder while they are still alive, as opposed to the benefits that would only be payable after their death. This concept is particularly relevant in certain types of life insurance policies, such as those that include critical illness riders or long-term care riders. These riders allow the insured to access a portion of the death benefit under specific circumstances, such as being diagnosed with a severe illness or requiring long-term care, thus offering financial support during challenging times.

This differs from the notion of benefits that are exclusively paid out posthumously, which is the core of many traditional life insurance products that provide a death benefit solely upon the policyholder's passing. In that context, living benefits are particularly valuable, as they address significant financial needs before death occurs. While extra coverage at the policy renewal or discounts based on healthy living may offer some additional value to the policyholder, they do not align with the fundamental nature of a living benefit, which is about accessing benefits while still alive.