5 Mistakes People Make When Buying Life Insurance With Living Benefits

Buying life insurance with living benefits can be a smart move—but only if you approach it with clarity. These policies can provide significant support during a serious illness or health crisis, but people often make avoidable mistakes that reduce the value or effectiveness of their coverage. Here are five common missteps to avoid:

1. Not Confirming Which Benefits Are Included

Many people assume that all living benefits are included in every policy. In reality, some insurers offer only basic accelerated death benefits, while others provide more comprehensive living benefits for critical or chronic illness. Always ask your insurance agent exactly what’s included, and whether you need to add any riders for full coverage.

2. Failing to Understand the Eligibility Criteria

Living benefits only activate when specific conditions are met—like a diagnosis of a terminal illness or the inability to perform two or more daily living activities. If you don’t know what qualifies, you might assume you’re covered for situations that don’t meet the policy’s standards. Review the fine print so you understand when and how benefits apply.

3. Overlooking How the Payout Affects the Death Benefit

Using living benefits reduces the amount left to your beneficiaries when you pass away. Some buyers don’t realize this until later, leading to surprise or disappointment for loved ones. Ask how much of the policy’s value can be accessed early and how that will impact the final payout.

4. Choosing the Cheapest Policy Without Comparing Riders

Not all living benefits are created equal. Some policies offer more generous coverage, easier claims processes, or additional support for long-term care. Don’t just choose the lowest premium—compare what each policy offers in terms of living benefits so you get the most value for your money.

5. Not Updating the Policy as Life Changes

Your health, income, and family needs may change over time. If you don’t review or adjust your policy, you might find that your coverage no longer fits your situation. Make it a habit to review your life insurance every few years—or after major life events—to ensure your living benefits still align with your goals.

Final Thought

Life insurance with living benefits can be a powerful tool, but only if you avoid common mistakes. Take the time to ask questions, read the fine print, and choose a policy that fits your life—not just your budget. The right coverage can offer peace of mind and real financial support when you need it most.