What is a 'living benefit' rider?

A 'living benefit' rider is a provision in a life insurance policy that allows the policyholder to access a portion of the death benefit while they are still alive. This is particularly valuable in situations where the policyholder faces a terminal or chronic illness. The purpose of the living benefit rider is to provide financial support during a time of need, allowing the insured to cover medical expenses, long-term care, or any other costs that may arise from their condition.

This rider enhances the overall utility of the life insurance policy, making it more than just a death benefit. Instead, it gives policyholders flexibility and additional financial security when they may need it most. This functionality sets it apart from other options, such as borrowing against the cash value of the policy or receiving a payout due to a critical illness, which may not allow for the same level of immediate access to funds. Therefore, the description of a 'living benefit' aligns precisely with this understanding.