Recent changes to life insurance policies provide relief from undue financial hardship. Having knowledge of these benefits may be of assistance to our clients.

Life insurance is, to state the obvious, insurance on a person’s life. A premium is paid to provide a benefit payable on death. Quite often, though, there is a significant need for funds prior to death. That is especially true when there are no other sources of funds such as extended health coverage or disability coverage.

In cases where an insured is terminally ill a life insurer may advance a portion of the benefit prior to death. A typical arrangement is that the insurer will consider an advance of up to 60% of the benefit. The balance of the benefit will be paid on death less expenses and an interest charge on the advance.

Typically a lawyer is not required to process this application. A medical report is considered sufficient to satisfy the insurer that the individual is terminally ill.

The option is not in most insurance policies. Some insurance companies are advertising the option as a living benefit. Many insurers have put the option in place despite there being no mention of it in the actual policy. The insurance broker should be contacted to confirm whether the option is available.