Term Life Insurance With Living Benefits (3 Best Companies)

Fewer and fewer companies offer term life insurance with living benefits nowadays. In contrast, living benefits come standard with many permanent policies, like whole life or indexed universal life. 

​But there is another part of term life insurance less well-known, living benefits.

​Some life insurance companies offer additional protection above and beyond death benefits. These extra features (called riders) can add to the usefulness of your policy, particularly while you’re alive.

What living benefits mean on life insurance

But term life offers much better cost-saving measures for life insurance. Premiums are often 1/10th of a comparable permanent policy. 

We will cover what living benefits are, the major types, advantages, and the best companies that still offer living benefits on their term policies. Click the table of contents below to jump ahead to any section that interests you.

​Quick Summary

​Life insurance companies add living benefits to policies so that clients can take advantage of their life insurance during their lifetime. There are several different types allowing for different options.

It’s not always easy to find living benefits on term policies, but they exist. We have listed 5 of our favorite term policies with living benefits below, but it’s always smart to talk to an agent about what company will best fit your life.

If you have questions at any point, you can leave them in the comments or give us a call at (858) 703-6178.

​What are Living Benefits?

Living benefits bring extra perks to a life insurance policy. They come in many different forms, but the most common accelerate the benefits – allowing you to access them during your life. 

​You will also hear the terms “accelerated benefits rider” and “accelerated death benefits” referring to living benefits. Insurance companies like to have their own unique names for the same features, much to everyone else’s confusion.

​These living benefits are not the only riders you can add to a term life insurance policy. There are all sorts of add-ons you can take advantage of to customize your policy to fit your family.

Less common types of living benefits insure your ability to make a living and the increasing expense of long-term care.

Advantages of Living Benefits

The biggest advantage of living benefits is that you have the opportunity to use your life insurance during your life.

​Chronic conditions are common, and an expected risk of aging. 40 million Americans have chronic diseases that limit their daily activities in some way, according to the American National Health Council. 133 million (about 40% of the population) have some type of chronic illness.

​Experts expect this number to rise to 157 million in the next couple of years. That doesn’t take into consideration the 81 million people who have multiple chronic illnesses.

​A major issue people have to deal with when faced with a diagnosis of chronic illness is the immense cost involved with treatment. The New England Journal of Medicine recently published a study that found people managing chronic conditions only receive 56% of the recommended preventative health care services.

Chronic disease in American represents 75% of all health care costs. Most people can’t afford to pay for all the long-term costs involved with managing a chronic disease.

​Then there is a whole list of expenses that come with caring for chronic illnesses that most health insurance plans don’t cover in full or at all. Costs like:

  • ​Nursing home care
  • Extended hospital stays
  • Medications
  • Home care
  • Loss of income while ill

​Living benefits on a life insurance policy can help. They’re a means to protect your family from the ruinous costs of medical care stacked on top of lost income.

Best Companies for Term Life with Living Benefits

These companies all offer fantastic living benefits with their term policies. We listed them in no particular order. The best company for you will depend on your age, health, and how much you’re looking for as far as benefits and term length.

​American National Signature Term Life

American National Signature Term with Living Beneits

​American National has a fantastic living benefits rider (they call it Accelerated Benefits Rider or ABR) in addition to one of the easiest underwriting processes out of any top-rated life insurance company.

​You have three living benefits options you can add to your policy at no additional premium. You must apply for a Signature Term policy to qualify.

  • ​Minimum policy amount for terminal illness – $25,000
  • Minimum policy amount for chronic and critical illness – $50,000

The maximum death benefits eligible for accelerated benefits riders are as follows: 

  • $2 million for ages 18 to 65
  • $1 million for ages 66+

There is no minimum amount for a partial acceleration request. If the policy’s face amount falls below the minimum required for approval, the partial request will be denied. If approved, American National can pay the amount as a lump sum. It could also be applied to other settlement options stipulated in the contract. 

The Children’s Term Rider does not qualify for acceleration requests. 

American National charges a $500 administration fee.

Accelerated Benefits for Terminal Illness

Taking advantage of ABR for Chronic Illness happens when someone becomes unable to perform two out of the six activities of daily living. These are bathing, continence, dressing, eating, toileting, and transferring.

American National also classified severe cognitive impairment (like Alzheimer’s) as a qualifying chronic illness.

Accelerated Benefit Rider for Critical Illness

ABR for Critical Illness opens up the option to advance benefits when a doctor diagnoses the insured with one of the following conditions: 

  • Heart Attack
  • Stroke
  • Invasive Cancer
  • End-Stage Renal Failure
  • Major Organ Transplant
  • ALS
  • Blindness
  • Paralysis
  • Arterial Aneurysms
  • Central Nervous System Tumors
  • Major Multi-System Trauma
  • AIDS
  • Severe Disease of Any Organ
  • Severe Central Nervous System Disease
  • Major Burns
  • Loss of Limbs

American National does have a waiting period of 30 days between diagnosis and advancing benefits to ensure the condition isn’t temporary or misdiagnosed.

Disability Waiver of Minimum Premium Rider

​The disability waiver of minimum premium allows you to skip paying policy premiums if you become disabled according to the rider’s definition of disability. It’s available for people 55 and under. The rider expires at age 60.

Disability waiver of premium rider

The insured must be totally disabled, defined as unable to work as determined by their doctor. The term “total disability” means the insured person is incapacitated due to disease or injury. 

You cannot be gainfully employed in any occupation which you are qualified to perform or become qualified to perform. The disability must be for at least six consecutive months.

​The following situations automatically qualify for total disability:

  • ​Permanent loss of all sight in both eyes
  • ​Severed loss of both hands at or above the wrist
  • Severance of both feet at or above the ankle
  • Severance of both one hand, at or above the wrist, and one foot at or above the ankle.

Signature Term Rider

​The Signature Term rider allows you to buy additional term life insurance on yourself (if you’re the insured on the policy), a family member, or an associate for whom you have an insurable interest.

​Remember, insurable interest means that you have a financial interest in the person continuing to live.

​You can add the Signature Term Rider either as an annual renewable term or for a period of 10, 15, 20, or 30 years.

​The death benefit on the rider must be at least $25,000. It also cannot exceed 4x the death benefit on the base policy.

Children’s Term Rider

​American National offers the option to add a child’s term rider onto a policy. The term will expire when the child reaches age 25 or when the insured person reaches age 65. The child does not have to be the biological child of the insured. Step-children, legally adopted children, and children born/adopted after the policy starts are also eligible.

​Other points to note:

  • ​Coverage is available in $1,000 units
  • Coverage ranges from $1,000 to $25,000 per child
  • Children must be at least 15 days of age to qualify
  • Children must also be under 18 years old
  • The insured must be between 18 and 55 years old
  • Once the child reaches 25, they can convert the term policy into a permanent life insurance policy for up to 5x the original coverage amount.

State Deviations

​California and New York both have different guidelines than the other 48 states. If you live in either state, see the additional details listed below.

​Some of these rules seem odd, but insurance companies add extra regulations for certain states to adhere to the state insurance regulations.

California state residents: 

  • ​American National requires a supplemental application to determine eligibility for critical and chronic illnesses
  • Chronic and Critical Illness riders are not available for anyone 65 years of age or older
  • Chronic Illness Rider is not available in conjunction with term coverage, whether it is the base policy or a rider

New York state residents: 

  • ​Critical Illness Rider is not available
  • Chronic Illness Rider requires a supplemental application
  • Chronic Illness Rider benefits require a healthcare practitioner’s certification for that illness
  • Chronic illness also requires a health care practitioner to provide a certificate to show that continuous care is necessary for the remainder of the applicant’s life
  • The maximum benefit paid for a chronic illness must not exceed the annualized per diem in effect for your long term care services


Foresters offers a good option for the lower end of the price range on term policies. They also have comparatively lower rates than other companies for people with diabetes. 

Foresters Life Insurance No Exam Policy

Most of their term policies offer the conversion option if you choose to keep the policy past the term limit. 

Foresters Living Benefits

Foresters includes the Accelerated Death Benefit Rider free with their Your Term product. This allows you to get some of your benefits early for chronic, terminal, and critical illnesses – as defined in the contract. 

They classify chronic illness as being unable to perform 2 out of the 6 activities of daily living. Alternatively, severe cognitive impairment also qualifies. 

Terminal illness means a 12-month life expectancy. 

Critical illness covers:

  • Life-threatening cancer
  • Myocardial infarction
  • Stroke
  • Advanced Alzheimer’s (more age 75)
  • End-stage renal failure
  • Major organ failure
  • ALS

One of the other features they offer that’s fairly unique is access to their scholarship program.

How living benefits are paid

It allows children of the insured to apply for a college scholarship, currently up to $2,000, and must be used the year it is issued. Their website says that many more people apply than they have funds allocated for these scholarships. So know that there’s no guarantee. More information here. https://www.foresters.com/en/foresters-difference/scholarships

National Life / LSW

National Life is another company offering free accelerated benefits riders on its term policy. They also provide some other free riders that can benefits families suffering from bad luck. 

National Life Group living benefits

You may see this company called Life Insurance Company of the Southwest, depending on where you live. National Life has a handful of subsidiaries. 

National Life Living Benefits

Their accelerated benefits riders are free. 

Chronic illness kicks in when the insured cannot perform two activities of daily living or has severe cognitive impairment. The caveat here is that the rider must have been in force for at least 24 months before these benefits become available. There is also a 90-day waiting period. The insured can accelerate up to 2% of their death benefit each month, but this varies slightly by state. 

Terminal illness qualifies for accelerated benefits at 24 months to live unless you live in Vermont or Pennsylvania. Then it’s only 12 months. 

Only the following qualify for critical illness:

  • Heart attack
  • Cancer
  • Major organ transplant
  • Blindness
  • ALS
  • End-stage renal failure

You have the option of adding a disability rider too. This one will increase your premiums. But it doesn’t hurt to get some extra income if you become disabled and your doctor says you cannot work. 

Other Riders

National Life offers a Vegas-style buffet of riders, tons of options for customizing the policy any way you like. 

They include: 

  • Waiver of specified premium 
  • Other insured – insure another person, probably a spouse
  • Overloan protection – ways to avoid policy cancellation if you borrow more than the face amount
  • Guaranteed insurability
  • Children’s term – add a child
  • Accidental death – extra death benefit if it results from an accident, not an illness

One outstanding (and free) rider that we love on this policy is the Unemployment Rider. If the insured becomes unemployed, premiums get waived. This can be particularly helpful in economically volatile industries. 

North American

North American includes their accelerated death benefits with all the types of policies they offer, not just their term. 

North American life insurance living benefits

We’re looking at their newer term policy for this article on term life insurance, the ADDvantage Term. YOu can choose the term length for 10, 15, 20, or 30 years. They do require a benefit amount than other term policies starting at $100,000 in benefits. 

North American offers a remarkable conversion option when you reach the end of the term. You can convert it to a permanent policy (like normal), or you can choose to get another term policy. The length of that converted term policy will depend on your age and the original term length. 

North American Living Benefits

By now, you’re probably familiar with the three main parts of accelerated earth benefits. North American has the standard inability to perform 2 out of the 6 ADLs or severe cognitive impairment. 

Their terminal illness expected lifespan is 24 months. 

Their critical illness policies have a slew of specifics about what counts and what doesn’t. For example, a myocardial infarction counts as a critical illness if it has a) typical clinical symptoms, b) ECH or EKH indicating ischemia, or c) requires coronary artery intervention. Cancers must be malignant tumors and invasive. They have a list of which cancers qualify at which stages, which we haven’t seen other carriers do.  

Other Riders

The two other main riders you can get are:

  • Waiver of premium for disability
  • Children’s term rider

The waiver of premium for disability is fairly standard. It kicks at after 180 consecutive days of total disability. You can still convert the policy while disabled, but you won’t have access to any riders. 

The children’s term life rider allows a child (biological, stepchild, or legally adopted) to get between $5,000 and $25,000 of term coverage lasting until age 23. At that point, they have the option to convert the policy if they want one in their own name. 

​​Mutual of Omaha Term Life Express with Living Benefits

Mutual of Omaha Term Life Express with Living Benefits

​Mutual of Omaha offers living benefits with their policy Term Life Express. You can get this in 10, 15, 20, or 30-year terms.

​You can get anywhere from $25,000 to $300,000 in benefits. It’s also a simplified life insurance policy, meaning you won’t have to take a medical exam. Just answer several medical questions on the application, and you’ll hear back in a couple of weeks.

​There are limits to how much you can purchase, depending on your age. Anyone 18 to 50 can get the full range of up to $300,000. However, if you’re between 51 and 65, you are limited to $250,000. Beyond 65, you will need to look at a different term policy with Mutual of Omaha. It’s normal for insurance companies to limit ages on simplified issue policies.

​Return of Premium Affects Your Living Benefits

​You can choose either level term life insurance, or you can opt for a partial return of premium on this policy. Level means that neither your benefits nor your premiums change for the life of your policy. Partial return of premium means Mutual of Omaha will pay you back a portion of your premiums if you cancel or surrender your policy.

​Having return of premium on your policy will affect your access to your living benefits.

​Living Benefits Available at No Extra Premium (Return of Premium Policy Only)

​Mutual of Omaha includes an Accelerated Death Benefit Rider at no extra charge on the return of premium version of this policy.

​If your doctor believes you have less than 24 months to live, you can choose to get 92% of your death benefits advanced as a lump sum. In Indiana, Oregon, and Washington, the lump sum is 94%. Florida also has a 94% lump sum, but you must have less than 12 months to live.

​The catch is that once Mutual of Omaha advances you the benefit, they cancel your policy. It becomes a decision between you, your family, and possibly a financial advisor on whether it’s better to have the 92% or 94% now or wait so your family can receive the full death benefit.

​Living Benefits Available at No Extra Premium (Non-Return of Premium Policy Only)

​Non-return of premium policies also have living benefits without any extra charge. However, they are slightly different than the living benefits on the return of premium option.

Term Life Insurance Living Benefits Riders
​Adding riders to your life insurance policy is akin to customizing your frozen yogurt. The difference is that living benefits can ​help you later, whereas frozen yogurt is almost always instant satisfaction.

​The first significant difference is that the maximum withdrawal amount cannot exceed 80% of the total death benefits. Secondly, the type of living benefits in this policy differ. You get a chronic illness rider, a terminal illness rider, and a critical illness rider.

​Chronic Illness Rider – You are unable to perform 2 out the 6 activities of daily living for at least 90 consecutive days. You can also qualify if you need daily supervision to prevent self-harm due to a cognitive dysfunction. Your physician must certify either scenario.

​The activities of daily living are:

  • ​Bathing
  • Continence
  • Dressing
  • Eating
  • Toileting
  • Transferring

​Terminal Illness Rider – You qualify if your physician believes you have 12 months to live or fewer.

​Critical Illness Rider – If your physician diagnoses you with one of the following illnesses, you can ask Mutual of Omaha to advance your benefits:

  • ​ALS
  • Kidney failure
  • Life-threatening cancer
  • Major organ failure
  • Heart attack
  • Stroke

​Included Riders (Free)

​There are a few other riders that also come with the policy at no extra charge. These are:

  • Residential Damage Rider – Mutual of Omaha will waive your premiums for the base policy and any riders for 6 months if your primary residence sustains over $25,000 in damage.
  • Waiver of Premium for Unemployment Rider – Mutual of Omaha will waive your premiums for six months for qualifying unemployment events.
  • Common Carrier Death Benefit Provision – If you pass away as a fare-paying passenger on a common carrier (think airplane or taxi), the policy will provide an additional death benefit. The additional benefit is the lesser of your policy face amount or $250,000.

​Additional Riders for Extra Premium

​You can further customize Mutual of Omaha’s Term Life Express. The following riders will cost extra if you choose to add them. Make sure to talk to your insurance agent about what makes sense for your family.

  • ​Disability Income Rider (not available for return of premium policies)
  • Disability Waiver of Premium Rider
  • Accidental Death Benefit
  • Dependent Children’s Coverage


How do I use my living benefits? 

When you meet the criteria of the type of living benefits you want to use, the company will have a form to fill out. You can also call your agent, who can walk you through the process. 

Should I pay extra for living benefits? 

That will depend on your risk tolerance. Although sometimes it’s better to have a separate policy for something like long-term care than adding it as a rider to a life insurance policy. Typically, separate policies offer better coverage. 

Why is it free on some policies and not others?

Life insurance companies tend to offer living benefits for free on their permanent policies. Term policies provide fewer free riders because the premiums can be as little as 1/10th of a similar permanent policy.

​Conclusions on Term Life Insurance with Living Benefits

Every year it seems less common to have living benefits on term life insurance policies. But several companies with good policies will still offer them. Talk to your insurance agent about comparing policies with and without living benefits to choose what will make the most sense for your family.

​How Abrams Insurance Solutions Can Help

​Life insurance with living benefits doesn’t have to be exclusive to expensive permanent life insurance policies. These three top-rated companies offer them on a term policy so more people can take advantage of them.

​We work with over 70 of the top-rated life insurance companies in the nation because we are an independent life insurance agency. That means we don’t have to work for any one particular company. We can customize an insurance policy that fits your family, not shoehorn you into a policy that’s the closest fit.

​Suffering a life-threatening medical condition is rough on everyone around you. Worse, it can tear through any savings or assets you’ve accumulated. Life insurance with living benefits is one way to help insulate your family against expensive medical conditions.

​If you have any questions, give us a call at 858-703-6178. We are happy to help, and there is never any obligation to buy.

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