If you are enrolled in a group life insurance program, it is likely that you have access to living benefits, also known as accelerated death benefits. Living benefits are an aspect of life insurance that many people are confused about, and it is best to understand what they entail before you need to use them. In short, living benefits allow you to access a portion of your life insurance benefits while you are still alive if you are terminally or severely chronically ill. Below are five more complicated aspects of living benefits that you should understand. 

You Will Need to Prove That You Are Terminally or Chronically Ill 

Before you can access living benefits, you will need to prove that you are terminally or chronically ill. This will usually involve a doctor writing a letter for you and including medical records that support their diagnosis. Some insurance companies may also require an examination and a second opinion by an approved physician in their network. For terminally ill patients, your doctor will have to state how long you are expected to live, as benefits will only be given within a certain period of your expected death. For chronically ill patients, your doctor will have to state how the illness affects your quality of life and ability to perform daily activities. 

How You Use Living Benefits Is Usually Not Restricted 

Living benefits are meant to pay for medical and care costs. However, you can often use them for a variety of things, including making house payments or repairs on your home. Most insurance companies do not restrict how you use your living benefits, meaning that you could even use them for a trip or vacation if you feel up to it. However, it is important to keep in mind that your survivors will only receive the portion of your life insurance that you do not access as your living benefits, so it is important to make sure they are taken care of. 

The Amount of Life Insurance You Can Access Before Death May Depend On the State You Live In 

Not only do insurance companies vary on how much of your life insurance you can access as living benefits, but the state you live in may have additional regulations and restrictions. This may mean that someone on the same group insurance policy as you who lives in a different state may have more or less access to living benefits than you do. It is important to check your exact policy for the percentage of your life insurance that you can claim as living benefits. 

You May Not Have to Pay Taxes on Living Benefits

Taxes when you are terminally ill can get complicated, especially if you are receiving a variety of health care benefits. You may be happy to know that most types of living benefits for both terminally ill and chronically ill patients can be excluded from your income when you file taxes. However, there are some circumstances when the benefits are taxable, such as when the policy has been sold to another holder. 

Terminally Ill and Chronically Ill Coverage Is Included In Different Riders

While living benefits may be part of your general coverage, some companies require that you pay for an extra rider to be eligible for living benefits. In addition, terminally ill coverage and chronically ill coverage are often offered as two separate riders. If you are interested in these types of benefits, you should make sure that you have paid for the appropriate riders. 

Understanding living benefits is an important aspect of understanding your life insurance. If you have more questions, you should contact a group insurance representative from a company like Health Shop Inc.