Wouldn’t it be helpful to take an “advance” against your life insurance death benefit if you are ever diagnosed as being chronically ill and still know there will be life insurance left for your family? That’s the purpose of your Accelerated Death Benefit for Long-Term Care Rider with Extension of Benefits Rider. Chronically ill means a licensed physician says you are unable to perform for 90 days or longer at least two activities of daily living—such as dressing, taking a shower, eating, toileting, and being able to move from one activity to another—or that you suffer severe issues with memory or being able to think.
The amount of money available to you if you are ever chronically ill will be 4% of your life insurance benefit for up to 25 months, provided you are in a licensed nursing or assisted living facility. If you are receiving home health care or day care instead, it will be 2% for 50 months. When benefits are paid under this provision, your life insurance death benefit, surrender charges, and your policy’s accumulation value will be reduced proportionately. If you have an outstanding policy loan, your monthly loan payments will be subtracted from your benefits every month to continuing paying off your loan balance. Any remaining balance will be paid to your beneficiary in the event of your death. If you have used all of your death benefit, the policy will end.
What happens if you take enough monthly advances that all of your life insurance benefit is gone? Your policy has an Extension of Benefits Rider to keep the monthly payments coming for twice as long. Here’s how it works: if at the end of the 25 months or 50 months described above you have used all of your death benefit and are still ill, the death benefit will be increased by 4% or 2% a month so payments can continue for up to twice as long: an additional 25 or 50 months, depending on the type of care you are receiving. If you use all of the additional death benefit amount, the policy will end.
In addition, your Extension of Benefits Rider will provide a fully paid-up life insurance policy equal to 25% of your original death benefit. That’s important, because as you continue to receive monthly payments, you want to make sure there is life insurance left to help protect your loved ones.
You will not need to make monthly premium payments during the months you are receiving benefits under this provision (those amounts are waived for you). When you file a claim, there will be administrative expenses deducted from your monthly claim payments.
You may have other accelerated death benefits that allow you to access your life insurance early for critical illness or other purposes. Remember that all of these provisions work together up to a maximum 100% of your life insurance death benefit