There are additional benefits associated with our life Insurance and annuity solutions provided by optional riders. We call them Living Benefits. Based on the product, living benefits can provide benefits should a qualifying terminal, chronic or critical illness or critical injury occur, or if your desire is to have an income that you cannot outlive. The best way to understand the impact living benefits can have is to hear from policy owners who have actually used them.
The Living Benefits allow you to receive a portion of the death benefit under the policy, during your lifetime, upon submission of required documentation regarding a qualifying event. The death benefit that you elect to accelerate will be paid at a discounted amount because it is being paid prior to the actual time of death. Benefits may be subject to taxation and may impact eligibility for Medicaid or other public assistance programs. Consult your legal and tax advisor for more information and refer to the rider for qualifications, limitations and fees. The owner should consult a competent tax advisor to determine the current tax consequences before requesting any accelerated death benefits. This rider is not intended to be a health contract, qualified long term care insurance contract under section 7702B(b) of the Internal Revenue Code or a non-qualified long term care insurance contract.
An accelerated death benefit such as the Chronic Illness Accelerated Benefit Rider and long-term care insurance provide very different kinds of benefits. Generally, an accelerated death benefit is a rider to or other provision in a life insurance policy that permits the policy owner to accelerate some or potentially all of the death benefit of a life insurance policy if the insured meets the definition of having a chronic illness as defined in the rider or policy provision. Acceleration of death benefits and payments under such an accelerated death benefit will reduce the death benefit of the policy and reduce other policy values as well, potentially to zero. If the entirety of the insurance amount is accelerated, the policy terminates.
A Long Term Care insurance policy is any insurance policy, certificate, or rider providing coverage for diagnostic, preventive, therapeutic, rehabilitative, maintenance, or personal care services that are provided in a setting other than an acute care unit of a hospital. Long-term care insurance includes all products containing any of the following benefit types: coverage for institutional care including care in a nursing home, convalescent facility, extended care facility, custodial care facility, skilled nursing facility, or personal care home; home care coverage including home health care, personal care, homemaker services, hospice, or respite care; or community-based coverage including adult day care, hospice, or respite care. Long-term care insurance includes disability based long-term care policies but does not include insurance designed primarily to provide Medicare supplement or major medical expense coverage.
The Critical Illness Accelerated Benefit Rider provides you access to your policy’s death benefit if you have a qualifying critical illness
What Is A Critical Illness ?
For purposes of this explanation, we are going to list those illnesses that are covered by critical illness insurance policies. The three primary are: cancer, heart attack and stroke. The Critical Illness Accelerated Benefit Rider provides you access to your policy’s death benefit if you have one of the qualifying critical illnesses or conditions as specified below. There may be a waiting period during which your policy must be in-force before the benefit from this rider is available.
Qualifying Critical Illness
Critical illness insurance policies may also cover such conditions as
- Heart Attacks or transplant
- Stroke
- Invasive Cancer
- Coronary bypass surgery
- Blindness
- Angioplasty
- Kidney (Renal) failure
- Major organ transplant
- Paralysis
Critical Illness Benefit
If you have a qualifying critical illness, you can file a claim and accelerate all or a portion of your policy’s death benefit. Your benefit will be paid in the form of a lump sum payment. The actual critical illness accelerated benefit amount available to be paid as an accelerated benefit will be based on our determination of the expected future mortality of a qualifying insured at the time an accelerated benefit claim is made. Under certain circumstances where an insured’s mortality (i.e., our expectation of the insured’s life expectancy) is not significantly changed by a Qualifying Critical Illness, the accelerated death benefit may be zero.
If a benefit under the Critical Illness Accelerated Benefit Rider is payable, we will provide you with one opportunity to elect a Critical Illness Accelerated Benefit Amount as to the occurrence of the Qualifying Critical Illness in question. To make such an election, the Owner must complete an election form and return it to insurance company within 60 days of the owner’s receipt of the election form. For example, if you have a qualifying heart attack, you will be provided an opportunity to elect a Critical Illness Accelerated Benefit Amount if you file a claim. If you elect not to receive an Accelerated Benefit, you will not be able to elect another Critical Illness Accelerated Benefit Amount for the same heart attack. However, if you have another qualifying illness event later, you can still choose to accelerate your remaining death benefit.
If, as to the occurrence of a Qualifying Critical Illness, You decide not to elect a Critical Illness Accelerated Benefit or if You decide to elect to receive less than the maximum Accelerated Benefit available for such Qualifying Critical Illness, You cannot thereafter elect a Critical Illness Accelerated Benefit and receive an Accelerated Benefit for the same occurrence of such Qualifying Critical Illness.
Why Was Critical Illness Insurance Created ?
Here is the short answer: Critical illnesses cause financial devastation to millions of individuals and families (even those with health insurance). A product was created that would provide cash at a time it was needed most.
For those who want a lot more information. Consider the following: Medical problems contributed to over 60 percent of all bankruptcies in the United States and a 2008 Harvard University study found that more than three-quarters (77.9 percent) had health insurance at the start of the bankrupting illness. This study was performed prior to the current economic downturn and will likely understate the current burden of financial suffering.
Critical illnesses are striking more Americans every single year. Some 1.4 million Americans are diagnosed with cancer (American Cancer Society). An estimated 785,000 Americans will have a first heart attack and some 600,000 Americans will experience their first stroke (American Heart Association). The vast majority will survive.
The financial consequences of surviving a critical illness are something few people are prepared for. Most health insurance policies come with deductibles and co-pays that can be as much as $5,000 a year. Prescriptions are not just costly, they are rarely fully covered.
And, here is something you likely have not considered; while you are undergoing treatment or recovering for an extended period of time, you will still have to pay your health insurance premiums. You’ll pay insurance, rent or mortgage, credit card bills, school tuition, real estate taxes, food and utilities.
According to the Harvard study, many families with health insurance found themselves under-insured and responsible for thousands of dollars in out-of-pocket costs. The average out-of-pocket cost was $17,749 for all medically bankrupt families. Because most health insurance is linked to employment, a medical event can trigger loss of coverage. For patients who initially had private coverage but lost it, the family’s out-of-pocket expenses averaged $22,568.
In the late 1990s, a new financial product was developed to help consumers cover expenses associated with critical illness. Appropriately, it’s called Critical Illness Insurance. This specialized insurance provides a lump-sum, tax-free payment should a policyholder suffer from certain specific critical conditions.
Some 600,000 Americans now have this protection purchased on an individual basis or through a plan offered by their employer.
The Chronic Illness Accelerated Death Benefit Rider provides you access to your policy’s death benefit if you have a qualifying chronic illness.
This is a life insurance benefit that also gives you the option to accelerate some or all of the death benefit in the event that you meet the criteria for a qualifying event described in the policy. This policy or certificate does not provide long-term care insurance subject to California long-term care insurance law. This policy or certificate is not a California Partnership for Long-Term Care program policy. This policy or certificate is not a Medicare supplement policy. The Chronic Illness Accelerated Death Benefit Rider provides you access to your policy’s death benefit if you have a qualifying chronic illness.
Qualifying Chronic Illness
To qualify as chronically ill, you must be certified by a Licensed Health Care Practitioner within the preceding 12-month period as:
- unable to perform, without Substantial Assistance from another person, at least two Activities of Daily Living (ADLs) for a period of at least 90 consecutive days due to a loss of functional capacity; or
- Requires Substantial Supervision to protect such Insured Person from threats to health and safety due to Severe Cognitive Impairment;
You must be deemed a “chronically ill person” as defined under the federal Health Insurance Portability and Accountability Act (Public Law 104-191), as amended.
ADLs: Bathing, Dressing, Toileting, Transferring, Continence, Eating.
Severe Cognitive impairment is a loss or deterioration in intellectual capacity that is comparable to (and includes) Alzheimer’s disease and similar forms of irreversible dementia. Proof of the determination is required prior to receiving any accelerated death benefit.
Chronic Illness Accelerated Death Benefit
If you have a qualifying chronic illness, you can file a claim to accelerate your death benefit. You can choose to receive your chronic illness benefit in one lump-sum payment or in periodic payments. We will divide the Chronic Illness Accelerated Death Benefit Amount you elect into equal periodic payments over the requested period. Such periodic payments may extend for no more than 24 months from inception. If you request to receive the Chronic Illness Benefit in periodic payments beyond the 12-month period from the initial certification submitted in support of your claim, a new certification must be provided as described by the rider for each benefit period.
Under certain circumstances where an insured’s mortality (i.e., our expectation of the insured’s life expectancy) is not significantly changed by a Qualifying Chronic Illness and, the accelerated death benefit may be zero. See the rider for details. Payments received under this chronic illness accelerated death benefit rider are not part of a health, long-term care, or nursing home insurance policy and may not be sufficient to cover medical, nursing home or other bills.
The Terminal Illness Accelerated Benefit Rider provides you access to your policy’s death benefit if you are terminally ill.
Terminal Illness Accelerated Benefit Rider provides you access to your policy’s death benefit if you are terminally ill.
Qualifying Terminal Illness
A Qualifying Terminal Illness is an illness or physical condition that is diagnosed by a physician to be reasonably expected to result in the insured’s death within 24 months from the date of diagnosis.
Terminal Illness Benefit
If you have a qualifying terminal illness, you can file a claim and request a one-time full acceleration or partial acceleration of the policy’s death benefit. Your benefit will be paid in the form of a lump sum payment.
The actual accelerated death benefit payment that we will offer for acceleration will be based on our determination of the expected future mortality of a qualifying insured at the time an accelerated death benefit claim is made and will be at least as great as the Cash Surrender Value corresponding to the accelerated death benefit.