What are living benefits in life insurance policies?

Living benefits refer to provisions within life insurance policies that allow the policyholder to access a portion of the death benefit while they are still alive, under certain circumstances. This typically occurs when the insured is diagnosed with a terminal illness or a chronic condition that significantly impacts their health. By providing access to these funds, living benefits serve as a financial safety net to assist with medical expenses, living costs, or any other needs that may arise due to a serious health issue.

This feature is particularly valuable because it enables policyholders to utilize their life insurance in a way that supports them during their lifetime, rather than solely as a benefit to their beneficiaries after the policyholder's death. It can alleviate financial burdens during a challenging time, allowing the insured to have more control over their financial situation.

In contrast, other options do not accurately represent the concept of living benefits. The first option pertains to posthumous benefits, which are distinctly different from living benefits. The third option focuses solely on funeral expenses, ignoring the broader applications of living benefits. Lastly, the fourth option relates to investment returns, which is not a characteristic of living benefits but rather a feature of certain types of life insurance policies.