Living Benefits vs. Disability Insurance

Here’s a pressing question—how would your family make ends meet if your income dried up?

There are only three answers…

1. My family would have to seriously alter their lifestyle to make ends meet.
2. Passive income from my business and investments would provide for my family.
3. Insurance would provide my family with the cash they need.

For many, option 3—insurance—is the most practical solution.

Often, that looks like life insurance. It pays your family a cash sum (called a death benefit) if you pass away. The death benefit can replace your income to help your family process their grief without also facing a financial crisis.

But what if you become disabled and can’t work? If you’re like many who face a disability before age 60, the next phase of your life might be spent recovering. You may be out of the workforce for several years, or even permanently.

That’s where two different types of insurance can come into play—life insurance with living benefits, and disability insurance.

Life insurance with living benefits gives you access to your death benefit while you’re still alive. The living benefits get triggered when a qualifying event occurs, like…

Chronic illness Terminal illness Permanent disability It may be the infusion of cash that you and your family need to help cover medical bills and living expenses.

But there’s a catch—it depletes your death benefit. If you pass away, you may have little to nothing left to leave your family.

Disability insurance works more like traditional car or home insurance. You pay a monthly premium. In return, your insurer will pay you a portion of your income if you become disabled. It’s a simple way to protect your income in the event that you’re no longer able to work.

Both private insurers and government programs provide disability insurance. You can check with your human resources department or a benefits advisor at work to see if they offer the option.

So which strategy is better for you? That depends on your situation. It’s wise to consult with a licensed and qualified financial advisor before making a choice.

But keep in mind, either way—life insurance with living benefits or disability insurance—you’re helping to protect your family financially so that they can carry on, and keep doing the things that matter most to them.

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