Permanent life insurance is often sold on the death benefit alone. But many clients get the most value from what a policy can do while they are alive. Explaining those living benefits helps clients see one plan addressing several needs.
Key takeaways
- Properly structured permanent life can provide tax-deferred cash value and tax-free income through withdrawals and loans.
- Riders can accelerate the death benefit tax-free for chronic illness or long-term care costs.
- Unlike qualified accounts, cash value has no required minimum distributions.
One plan can protect a family, build tax-deferred savings and help pay for long-term care.
What “living benefits” means
Living benefits are the ways a permanent policy delivers value before the insured dies. They include cash value that grows tax-deferred and can be accessed, and riders that pay part of the death benefit early if the insured has a qualifying illness or needs long-term care.
Cash value access
- Tax-deferred growth on the policy’s cash value.
- Tax-free income through withdrawals up to basis and policy loans, when structured properly and the policy is not a MEC.
- Flexible premium payments on many designs.
- No required minimum distributions, unlike IRAs and 401(k)s.
Loans and withdrawals reduce the death benefit and need monitoring to avoid a lapse.
Chronic illness and long-term care benefits
Close to 70% of people turning 65 will need some long-term care. CareScout’s 2025 national medians put in-home care at $35 an hour and a private nursing home room at $10,798 a month. An LTC or chronic illness rider lets clients use part of the death benefit, generally tax-free, to help cover those costs. Learn more about LTC riders on life insurance.
Who to talk to
Successful clients aged 30 to 50 with young families are often ideal candidates. Look for clients who value a plan that covers multiple needs rather than simply the lowest price. Some carriers also offer wellness programs that reward healthy habits with premium savings; confirm current availability. Our team can help you compare products for a budget of a few hundred dollars a month.
Frequently asked questions
What are living benefits in life insurance?
They are features that pay value while the insured is alive, such as accessible cash value and riders that accelerate the death benefit for chronic illness, critical illness or long-term care.
Are accelerated death benefits taxable?
Benefits paid for qualifying chronic illness or long-term care under IRS rules are generally received tax-free, within limits. Clients should confirm with their tax advisor.
Does cash value life insurance have RMDs?
No. Unlike IRAs and 401(k)s, cash value in a life policy is not subject to required minimum distributions.
Reviewed by Tim Fuller on 2026-09-26
Tim Fuller
President, SRS Inc.
Tim leads SRS Inc., a full-service IMO (Independent Marketing Organization) and BGA (Brokerage General Agency), connecting independent financial professionals with life, annuity, disability income, and long-term care solutions from 60+ carrier partners.
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