Key takeaways
Living benefits are features that let you use your life insurance while you’re alive, not just leave money to your loved ones.
Many policies offer accelerated death benefit riders, which can advance part of your death benefit if you’re diagnosed with a terminal, chronic, or critical illness.
Any amount you receive early is subtracted from what your beneficiaries will get, and rider terms vary by insurer, so it helps to understand the trade-off first.
Permanent life insurance can also build cash value you can access through loans, withdrawals, or premium payments as your needs change.
A financial advisor can help you choose the policy and riders that fit your goals and budget.
Get an instant term life insurance quote
The primary purpose of any life insurance policy is to provide financial protection for your loved ones after you pass away. However, life insurance can also provide “living benefits” — features and protections that can help you while you’re still alive. That can matter if you face a serious diagnosis, need long-term care as you age, or want a financial resource you can tap later in life. Certain kinds of policies can also help you build wealth, with “cash value” that can be accessed while you’re still alive. This article will help you better understand the two main types of life insurance — term and permanent — and tell you about:
Andy Gordon, Head of Individual Life Insurance at Guardian, says that “some people think life insurance has no value until decades out. But many policies have living benefits you can get right away.”1
Two main types of life insurance with different benefits and features
The two primary types of life insurance coverage are term life insurance and permanent life insurance. Term life insurance is a more cost-efficient way to get a given dollar amount of protection. However, a term life policy (and its payout) only lasts for a limited time — typically 10 to 30 years — and does not build cash value. Once the policy’s term runs out, there’s no protection and no value left.
Permanent life insurance, on the other hand, lasts your entire life as long as you keep paying the premiums.2 These policies also provide other benefits, including cash value that can be used while you are still alive.3 The two most popular types of permanent policies are whole life insurance and universal life insurance. Both provide lifelong insurance coverage and build cash value. However, the policies differ in their flexibility, guarantees, and methods for calculating cash value growth.4
What are the living benefits of a term life policy?
One of the main reasons term life insurance costs less than permanent insurance is that you are only paying for the death benefit — i.e., the lump sum of money paid to your beneficiaries if you die while the policy is in force. Some term life policies do have living benefits; however, these come in the form of riders. An insurance rider is an addition to your policy that adds a benefit, usually at an extra cost.5 Some common types of living benefit riders for term life insurance include:
Terminal illness rider
One type of accelerated death benefit, this rider can help provide funds if you receive a terminal diagnosis that shortens your life expectancy to a period set by the policy — commonly 12 or 24 months. This rider can help cover end-of-life care and related expenses, but the benefit can also be used for things beyond that. For example, if you’re healthy enough to travel, it can be used to take a vacation to a place you’ve always wanted to go. Many insurers add this rider automatically, but there may be a waiting period: the policy must be in force for a specified amount of time before you can access the benefit. Also, any amount that is advanced will be deducted from the benefit amount paid to your beneficiaries.
Critical illness rider
This can provide financial support after a diagnosis of a covered critical illness — such as a stroke, heart attack, or kidney failure — that isn’t necessarily considered terminal. As with a terminal illness rider, this money is deducted from the benefit paid out after you die.
Chronic illness rider
This is like a critical illness rider but applies if you are diagnosed with a chronic illness that prevents you from being able to complete at least two of six “activities of daily living.” These activities include eating, bathing, using the bathroom, getting dressed, transferring, and continence. Again, any money advanced is deducted from your death benefit.
Long-term care rider
Similar to a chronic illness rider, a long-term care rider lets you use part of your death benefit to help pay for qualifying long-term care services, such as home care, assisted living, or a nursing home. It’s often available on permanent policies, such as Guardian’s Long Term Care Rider for whole life insurance. The rider may not be available in all states. If you have term coverage, Guardian’s Care Conversion Option Rider gives eligible Guardian Level Term policyholders who add it when they buy their policy access to a long-term care rider when they convert to permanent coverage during the conversion period, with no additional underwriting.
Planning ahead for care can make a real difference. Guardian research found that working caregivers spent an average of 23 hours a week providing care in 2025, up from nine hours in 2020.6 Yet about a quarter of Americans age 45 and older (26%) say they haven’t considered who will care for them if they become ill or disabled or as they age.7
Return of premium rider
This is actually a distinct kind of term policy that returns the premiums paid into your policy at the end of the term (assuming you don’t pass away, in which case the death benefit is paid out instead). This type of term life policy can be significantly more expensive than the typical term policy.
Waiver of premium rider
This rider allows you to stop paying your premiums while keeping the policy in force if you become disabled (a covered injury or illness that keeps you from earning income).8 Learn more about the waiver of premium rider.
On a permanent policy, this rider can also help your cash value keep growing. As Guardian Financial Advisor Ashvin Chheda explains, “The disability waiver allows the policy to continue. The insurance company keeps funding the policy with the premium, so the cash value keeps growing and the death benefit keeps doing its thing.”9
How accelerated death benefit riders work
Terminal, chronic, and critical illness riders are all types of accelerated death benefit riders. Each one lets you receive part of your policy’s death benefit early if you meet the rider’s qualifying conditions. A few things to keep in mind:
It’s not separate coverage. Any amount you receive is an advance on your death benefit, so your beneficiaries will receive less.
Payouts are often capped. Many riders limit the advance to a percentage of the death benefit or a maximum dollar amount.
There may be a cost. Some riders add to your premium, while others charge a fee or reduce the payout when you use the benefit.
Details vary by insurer and policy. Qualifying conditions, waiting periods, and benefit amounts depend on your contract, and riders may not be available in all states.
Learn more about common life insurance riders.
What are the living benefits of permanent life insurance?
A permanent life policy will typically offer most of the optional riders noted above, but it also has an important feature that term life does not provide: cash value. For example, whole life insurance builds cash value and may also include living benefit riders, depending on the policy. So while permanent insurance is typically more expensive than term, most of the cost difference is because premium dollars can contribute to a policy’s cash value, which can grow tax-deferred over time, helping your family build wealth.
Cash value usually takes a few years to grow into a usable sum, but once that happens, it can become a financial asset with many advantages. Generally speaking, there are four ways to access life insurance cash value:
Surrender: Cashing out your policy is usually not advisable, but it is possible. While you can cancel your policy and take the cash surrender value payment, you’ll no longer have life insurance protection, and you may face significant surrender fees and/or taxes — but there are other ways to access those funds.
Withdrawal: In many situations, you can withdraw cash from your permanent life policy. That money is often nontaxable as long as it’s not more than the amount you’ve paid into the policy. However, the policy’s death benefit will likely be reduced, and that reduction may be more significant than the amount withdrawn, depending on the terms of your policy.
Loans: You can use your policy cash value to secure a loan that accrues interest at a fixed or variable rate set in the contract. Rates can be competitive with or lower than a personal loan, and there is no application or credit check. You can even choose not to repay, but the outstanding loan balance will usually be deducted from your death benefit. Keep in mind that unpaid interest is added to the loan balance, and if the loan grows larger than your cash value, the policy could lapse, which may create a tax bill. Learn more about life insurance loans.
Premium payments: Want to stop paying premiums after you retire? You can often use the money in your cash value to pay part or all of your premiums, making it much easier to keep your cash value insurance coverage in place.
Cash value can also give you flexibility when markets are down. “The cash value in a whole life policy lends itself to being a volatility buffer. It’s a source of income or capital during bad markets,” says Chheda.10
Is life insurance with living benefits worth it?
The answer depends on what you want your coverage to do. Here are a few ways to think it through:
If you need protection for a set period, such as while you raise children or pay off a mortgage, term life insurance with living benefit riders can be a cost-efficient choice.
If you want lifelong coverage or a source of cash value, permanent life insurance may be a better fit.
If you already have disability or long-term care coverage, consider how a rider would work alongside it.
The main advantage of living benefits is flexibility: they can give you access to money when you need it most, often without buying a separate policy. The trade-offs are that riders may add cost and that any benefit you use early reduces what your loved ones receive. Whether you work with a financial advisor or do your own research, compare rider definitions, exclusions, costs, and benefit amounts before you buy.
What kind of living benefits do you want from a life insurance policy?
Your life insurance needs are unique to you. If you’ve decided it’s time to get life insurance protection — or add to your existing coverage — that’s an essential first step. You’re not alone: According to LIMRA and Life Happens’ 2026 Insurance Barometer Study, 38% of US adults — roughly 92 million people — say they need life insurance or need more than they have.11 But if you aren’t sure which living benefits best suit your needs, it’s time to take the next step. Talk about your situation and goals with a financial advisor, preferably one who has helped others get term and permanent coverage. If you already have a policy, they can also help you review which riders it includes. If you need help finding such a person, Guardian can connect you to a financial advisor who can help. One last bit of guidance: Don’t put things off if you’re not sure what kind of policy to get, because your life insurance costs will generally go up with age. As Gordon puts it, “people procrastinate. Part of it is the belief that it’s not going to happen to them — it’s something in the future.”12
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Frequently asked questions about life insurance benefits
For term life policies, these benefits generally come in the form of insurance riders that are available for an added fee. Most of these riders allow the insured to tap into the policy’s death benefit in situations where funds are needed for health reasons, such as becoming chronically or terminally ill. Permanent life insurance policies also offer a wealth-building living benefit: tax-efficient cash value that can be used in a variety of ways while you are still alive and even help fund your retirement.
Both permanent and term life insurance have riders, i.e., optional benefits that can be added, allowing you to access benefits while you are still alive, but only in limited situations. However, permanent insurance also provides cash value that can help build family wealth with tax advantages.
Accelerated death benefits paid because of a terminal illness are generally excluded from federal income tax, and benefits paid for a chronic illness may also be excluded, up to IRS limits.13 Cash value withdrawals above the amount you’ve paid in premiums, or a policy that lapses with a loan outstanding, may create taxable income. Because the rules depend on your situation, talk with a tax or financial advisor before you access your benefits.
It depends on your policy. Accelerated death benefit riders typically let you receive a portion of your death benefit — often up to a set percentage or dollar limit — and the amount you receive may be reduced by fees or a discount. With permanent life insurance, the cash value you can access depends on how much your policy has built up over time.
Your cost depends on factors such as your age, health, coverage amount, the type of policy, and the riders you choose. Some accelerated death benefit riders are included at no added premium and charge only if you use them, while others add to your premium. Permanent policies typically cost more than term because part of your premium builds cash value. You can get an instant term life insurance quote online to see a starting price.
