Critical Illness Benefit

The Critical Illness rider gives you the option to accelerate a portion of your death benefit if you are diagnosed with a heart attack, stroke, cancer, renal failure, major organ transplant or ALS.

Hypothetical Example: Critical Illness Benefit — Randi, Age 40

Purchases Term Life with a 30-year duration with a $250,000 death benefit.

Randi is diagnosed by her physician with breast cancer at age 62. She has a husband and two children. Prior to getting sick, she worked as a school teacher. Her husband owns a painting business. Randi chooses to exercise her critical illness rider and receive a portion of her death benefit early. She plans to use the money to help the family cover her medical expenses and make up for her husband’s lost income while he cares for her.

1. Base Policy Death Benefit = $250,000
2. Randi accelerates 95% of her death benefit or $237,500. Her actual benefit amount will be based on the severity of her illness and its impact on her future life expectancy. Given her condition, Randi receives a benefit of $100,526 to be used as she wishes.
3. Her remaining death benefit is now $12,500 and her premium is reduced proportionally.

Without these living benefit from her Term Life policy,
Randi’s family would have to dip into their retirement savings to cover the unexpected medical costs.

Are You Prepared For an Unexpected Illness?

According to the American Cancer Society, there will be an estimated 1.6 million new cancer cases diagnosed and more than half a million cancer deaths in the U.S. in 2015.

The American Heart Association reports that cardiovascular disease is the leading global cause of death, accounting for 17.3 million deaths per year, a number that is expected to grow to more than 23.6 million by 2030.

Furthermore, the U.S. Department of Health and Human Services says the average cost for long-term care in the United States is over $6,000 per month for a semi-private room in a nursing home and more than $3,000 per month for care in an assisted living facility.

Many people are simply not prepared for a chronic, critical, or terminal illness. They think that just because they have a health insurance or disability plan, they will be sufficiently covered in the case of a serious ailment like a heart attack, stroke, or a report of cancer. The fact is, that’s probably not true.

A great health insurance plan might cover a large part of those medical costs, but there could be deductibles, co-payments, and out of pocket expenses to deal with first. Plus, a health insurance plan won’t help you with lost income while you are sick or recovering from your illness. A disability plan might help your financial situation while you are away from work, but even the best ones can only cover about half of your lost wages.

Regardless of how old you are, how much money you make, or what kind of health care coverage you have, two things are inevitable in the case of an unexpected illness: your expenses will go up and your income will go down, resulting in debt that could leave you paralyzed financially.

According to a study by Harvard researchers, over 60 percent of all personal bankruptcies in the United States were a direct result of medical problems. What’s even worse is that nearly 80 percent of those patients who were suffering from a critical illness had health insurance coverage at the start of their illness. It clearly demonstrates that additional protection is needed—more than what many of the health and/or disability plans are able to provide for you.

That’s where life insurance with Living Benefits—also known as an Accelerated Death Benefit Rider—can be there to help you when you need it the most.

Dealing With a Critical, Chronic, or Terminal Illness

Let’s say you develop a chronic illness that is going to require a long-term approach to getting better—or that you suffer a heart attack, stroke, or you receive a diagnosis of cancer. In all these cases, there is a good chance you could recover and continue to live a full and meaningful life, if you are able to afford the cost of proper treatment and care. Unfortunately, your health insurance coverage will likely only offer a partial solution. Wouldn’t it be beneficial for you to be able to access your death benefit to help pay for those costs rather than digging into your savings account?

According to a USA Today report, one in four cancer patients or their families said they spent all or most of their savings to pay for their treatment. And one in eight people with advanced cancer turned down recommended care because of the costs involved.

“Growing numbers of people simply can’t afford to get the care we know they need,” said John Seffrin, chief executive officer of the American Cancer Society. “We hear about a growing number of people turning down treatment.”

Term Life Insurance will accelerate most of your death benefit if you qualify as terminally ill, but that seems like more of a death benefit for a death sentence. With Living Benefits added to your life insurance, you can be covered in three separate areas:

  • Critical Illness – Typically pays one lump sum if you suffer from an illness like cancer, heart attack, stroke, and other diseases.
  • Chronic Illness – Typically pays a monthly benefit if you have been diagnosed as chronically ill and you are unable to perform two daily activities such as bathing, dressing, or eating. This benefit could pay up to a quarter of the amount of your death benefit annually.
  • Terminal Illness – Typically pays a benefit if you are diagnosed with a terminal illness where your life expectancy is between 12-24 months. These funds can be used for experimental medicine, preparing for final expenses, or any other purpose that you deem necessary.

Some restrictions may apply. Please contact a licensed Life Insurance agent at 1-800-407-1369 to discuss the details of adding Living Benefits to your life insurance coverage.

What Happens When You Have Life Insurance With Living Benefits?

If you should suffer from any qualifying critical, chronic, or terminal illness—such as a heart attack, stroke, or you receive a report that you have cancer, to name a few—you would have the option to collect part of your death benefit to help pay for the expenses associated with your illness.

Of course, the amount of money your beneficiary would receive as part of your death benefit would then be reduced by that amount. But having the option to accelerate your death benefit funds could be a critically important step in helping you and your family through an unexpected and unfortunate crisis. It might even be the difference in helping you enjoy a long and healthy life after your illness.

A licensed Life Insurance agent can help you and don’t forget to ask how you can add Living Benefits to your traditional life insurance coverage.


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