Living Benefits Last reviewed: 2026-10-03 Part of Living benefits

How Much Do Living Benefits Really Pay?

Written and reviewed by Hans Goldstein, licensed insurance producer, NPN 20602398 · CA Insurance License #4273294
Last reviewed October 3, 2026 · Published October 3, 2026

Short answer: it depends on how sick you are and how long you are expected to live. On the common no-charge (discount) riders, a terminal diagnosis with months to live pays close to the maximum: Transamerica's own example paid 92%. A heart attack at 48 paid 54%, and a chronic illness at 45 paid about 30%. Riders you pay a charge for usually pay close to full value. The keyword in every brochure is up to.

Why "up to 80%" rarely means 80%

The percentage in a living-benefit brochure is the most you can accelerate, not what you receive. On a discount rider, the insurer pays the present value of the death benefit you pull forward, based on your new life expectancy, then subtracts a fee, a share of any policy loan and an adjustment for future premiums. The closer you are to death, the less the insurer discounts. That is the whole mechanism, and National Life's own guide says it plainly: that is why terminal illness has the highest benefit amount (LSW guide).

Two definitions matter. Terminal illness means death is expected within 12 or 24 months, depending on the carrier (federal tax law uses 24, and California will not allow less than 6). Chronic and critical illness claims usually involve people who are expected to live for years, so they get the deepest discounts.

Listen for "will"

An honest presentation of anything non-guaranteed uses words like "up to", "could" or "illustrated at". If you hear "will" about cash value, index credits, loan income or a living-benefit payout ("this policy will pay you 80%", "you will have $1 million at 65"), treat it as a red flag. Only the guaranteed column and the contract's stated guarantees are promises; ask the person to show you where the word "guaranteed" appears.

The carrier's own numbers

What a discount rider actually paid in Transamerica's own examples

Carrier example (hypothetical, from the carrier's own materials)	Amount accelerated	Paid	Share paid
Terminal illness, age 53, 8 months to live, $500,000	$500,000	$462,103	92%
Heart attack at 48, 10-year life expectancy, $250,000 face	$225,000	$122,258	54%
Same heart attack case, older Transamerica design	$225,000	$52,294	23%
Chronic illness at 45, $300,000 face	$75,252	$22,285	about 30%
Chronic illness case, older Transamerica design	$72,000	$8,554	12%

Sources: Transamerica Financial Foundation IUL II living benefits brochure (07/25) (07/25) and Transamerica: older chronic illness rider guide. These are the insurer's illustrations, not claims data, and they apply to Transamerica's designs only.

Two lessons in that table. First, the same heart attack paid 54% on the newer design and 23% on the older one, so the version of the rider matters as much as the carrier. Second, chronic illness is where discount riders disappoint most: about 30% on the newer design and 12% on the older one. Transamerica's newer rider also caps chronic acceleration at 24% of face a year and 90% lifetime (Transamerica).

California critical illness can be smaller still. North American's California brochure caps a critical illness election at the lesser of 25% of face or $50,000, and guarantees only 40% of that, a $20,000 minimum on a $500,000 policy (North American CA brochure).

Hans's rule

The keyword is UP TO. A no-charge rider is a nice extra, worth having. It is not a long-term care plan, and it is not a reason by itself to pick one policy over another. If you are counting on it, get the carrier's sample calculation at your age before you buy.

Living benefits

What would your rider actually pay?

Send your email and I'll send the questions to ask your insurer, then read the answer with you. Within one business day.

We’ll email it to you. Hans Goldstein · NPN 20602398.

Rather talk it through? Or book 15 minutes on Hans’s calendar.

Riders that pay closer to full value

Not every living benefit is discounted. Charged (prepaid) riders cost something each month or year and, in return, pay near full value, often monthly. Examples on the market: Nationwide's LTC Rider II (Nationwide), Lincoln's LifeEnhance (Lincoln), Securian's charged chronic and LTC agreements (Securian), and National Life's Premium Chronic Care Rider, which is not available in California (National Life). Corebridge's Accelerated Access Solution pays dollar for dollar, 2% or 4% of the death benefit a month, with no fee on Max Accumulator+ (Corebridge).

Discount vs charged vs real LTC

Rider type	Up-front cost	Typical payout	Best use
Discount (no charge)	None	Near the max for terminal; often a fraction for chronic or critical	A free extra on a policy you want anyway
Charged / prepaid (LTC-type)	Monthly or annual rider charge	Close to full value, usually monthly	People who want the policy to double as care funding
True LTC or hybrid life/LTC	Separate premium	Monthly care benefit set by the contract	A real long-term care plan

For the full comparison with long-term care insurance, read living benefits vs long-term care.

Questions to ask: what will it actually pay at my age and condition?

Is this rider a discount (present value) design, a lien design, or a charged rider that pays close to full value?
For a heart attack, stroke or cancer diagnosis at my current age, what would the carrier's sample calculation pay on my face amount?
For chronic illness, what is the annual maximum, the lifetime maximum, and the per-claim fee?
Does the California version of this rider differ from the brochure? (CA forms often do.)
How would an outstanding policy loan reduce the payout?
Is the payment excluded from income under IRC §101(g) for my situation, and could it affect Medi-Cal or other means-tested benefits?

Taxes and public benefits

Terminal illness payments are generally excluded from income under IRC §101(g). Chronic illness payments are generally excluded up to actual qualified care costs or the per diem limit, $430 a day in 2026 (Rev. Proc. 2025-32), reported on Form 1099-LTC and Form 8853 (IRS). Critical illness payouts outside the 101(g) definitions can be taxable. A lump sum can also count as an asset for Medi-Cal or SSI, which is why California requires a notice that the benefit may affect public assistance (CA Ins. Code §10295).

What to do this week

Pull your policy and find the rider names. Look for a rider charge on your annual statement.
Ask the insurer (as the owner) for a sample accelerated benefit calculation for a chronic illness and a critical illness at your current age.
If the number is far below what you assumed, price a charged rider, hybrid policy or LTC policy before a claim ever happens.
Send what you get to Hans and he will read it with you.

Request a real payout illustration for your policy

"Up to 80%" is the ceiling, not the check. Send your policy or quote and Hans will ask the right questions and show what the rider would likely pay at your age and condition, in writing, within one business day.

Own the policy? You (the owner) can ask the insurer for a sample accelerated benefit calculation. Hans will tell you exactly what to ask for.

Rather talk it through? Or book 15 minutes on Hans’s calendar, or call 213-414-2808.

Hans Goldstein · 213-414-2808 · NPN 20602398, independent licensed insurance producer

Frequently asked questions

How much do living benefits actually pay?

It depends on how sick you are and your life expectancy. In Transamerica's own examples, a terminal illness paid 92% of the amount accelerated, a heart attack at 48 paid 54%, and a chronic illness at 45 paid about 30%. Charged riders usually pay close to full value.

Why does a terminal illness pay more than a chronic illness?

No-charge riders use a discount method based on life expectancy. Someone expected to die within 12 to 24 months gets most of the face; someone expected to live for years gets a much bigger discount.

Does up to 80% mean I get 80%?

No. It is the maximum share of the death benefit you can accelerate. The check on a discount rider is the present value of that amount based on your life expectancy, minus fees and any loan.

Are living benefits a substitute for long-term care insurance?

No. California requires a notice that accelerated death benefits are not long-term care insurance. Charged LTC-type riders and true LTC or hybrid policies are built for care costs.

Can I find out what my rider would pay before I get sick?

Yes. As the policy owner you can ask the insurer for a sample accelerated benefit calculation at your age. Hans can tell you what to ask for and read the answer with you.

Sources

Hans Goldstein, CA Insurance License #4273294 · NPN 20602398 · Goldstein & Co. LLC dba Goldstein Insurance Services, CA License #6016830

Contact: hans@hansgoldstein.com · 213-414-2808

General education, not tax or legal advice. Tax treatment depends on your facts and on current law, which can change. Talk to your CPA or estate attorney. Guarantees are backed by the financial strength and claims-paying ability of the issuing insurance company. Guarantees apply only to the contractual terms of the policy. Caps, participation rates, loan rates, charges and dividends are not guaranteed and can change. Hans is paid a commission by the insurer if you buy a policy through him. For life insurance, ask and he will tell you what he earns on your specific policy. Product and company names are trademarks of their owners. Goldstein Insurance Services is an independent agency, not affiliated with or endorsed by any insurer named here. Life insurance requires underwriting; not everyone qualifies. This page describes products in general terms; read the policy and the insurer's disclosures before you buy.