Unless one has life insurance with "living benefits", the death benefit is paid out upon the death of the insured person, and the beneficiary may use the life insurance proceeds as they wish. They might use it to pay medical bills, burial expenses, to pay off a mortgage, or invest it for future needs.
Life insurance with living benefits allows the insured person to use some of the money that would normally have been paid out at his/her death, to use while he/she is still alive, under some circumstances. If the policy includes a benefit for critical illness, this can be used to pay medical bills for some critical illnesses such as heart attack or certain types of cancer. A chronic illness living benefit provides cash for expenses incurred when unable to do two or more ADL's.
Agent Owner, Gilmore Insurance Services, Marysville, Washington State
I will be dating myself by saying this, but life insurance is the silly putty of financial products. It can do just about anything. So yes, if you have cash value life insurance you can use the funds for a medical bill that has come to you unexpectedly. You can use your cash values for any purpose you choose, which is a blessing and a curse. The blessing is you can use the cash values for any emergency. The curse is what you define as an emergency.
The great thing about life insurance is that the beneficiary receives the money proceeds tax free and can spend them on anything they wish including medical bills. If you purchase a cash value life insurance plan such as whole life insurance or universal life insurance, you can borrow from your cash value tax free and use the money for medical bills or anything else you desire. You may also purchase a rider on most all types of life insurance plans that can give you proceeds to be used in case of a critical illness and that money can also be used for mounting medical bills. So, the simple answer to your question would be yes, you can use life insurance to pay medical bills if you so desire.
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Life insurance with living benefits allows the insured person to use some of the money that would normally have been paid out at his/her death, to use while he/she is still alive, under some circumstances. If the policy includes a benefit for critical illness, this can be used to pay medical bills for some critical illnesses such as heart attack or certain types of cancer. A chronic illness living benefit provides cash for expenses incurred when unable to do two or more ADL's.