The Chronic Illness rider gives you the option to accelerate a portion of your death benefit early if you are certified by a Physician as being unable to perform at least two ADLs or activities of daily living (bathing, continence, dressing, eating, toileting, transferring) or if you require substantial supervision due to severe cognitive impairment.
Hypothetical Example: Chronic Illness Benefit — Joe, Age 60
Purchases Term Life with a 20-year duration and a $200,000 death benefit.
After 10 years, Joe is 70 years old and is suffering from complications related to COPD (Chronic Obstructive Pulmonary Disease) that have left him unable to perform 2 ADLs. His wife works full-time and is not able to provide the daily care assistance that he requires. Joe decides to exercise his chronic illness rider to help pay for his care assistance. Two years later, Joe’s condition has not improved and he decides to exercise his rider a second time to help pay for his extensive medical costs. Joe passes away one year later. His beneficiaries will receive his remaining death benefit which will help them pay for his final expenses.
Base Policy Death Benefit = $200,000
First Election: Joe accelerates 50% of his death benefit or $100,000. His actual benefit amount will be based on the severity of his illness and its impact on his future life expectancy. In Joe’s case, he receives a lump-sum benefit of $82,030 which can be used however Joe wishes. His remaining death benefit is now $100,000 and his premium is reduced proportionally.
Second Election: Joe accelerates 90% of his remaining death benefit or $90,000 (the remaining amount available to accelerate). He receives a lump-sum of $73,469 based on his current life expectancy.
Joe dies at age 73. His remaining death benefit of $10,000 is paid to his beneficiaries.
Without this living benefit from his Term Life policy, Joe’s family would have a hard time coming up with the money to cover his extensive medical costs.
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