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How living benefits can help in case of chronic, terminal or critical illness

By: F&G

Life insurance can protect your loved ones after your death and bring benefits during your lifetime. With a living benefits rider1 – also known as an accelerated death benefit rider – your indexed universal life (IUL) policy can help protect you financially in the event of a qualifying chronic, terminal or critical illness. This may include:

  • Heart disease
  • Cancer
  • Chronic lung or kidney disease
  • Stroke
  • Alzheimer’s disease
  • Diabetes

Let’s look at how some life insurance policyholders used their living benefits riders for financial benefit during their lifetimes.

A chronic illness rider helps Sue pay for the cost of care

Sue recognized the value of life insurance early and purchased her IUL policy at age 35. By age 67, she began experiencing chronic pain. A licensed health care practitioner diagnosed her with a chronic illness requiring repeated, expensive treatments to remain mobile. Determined to remain active, Sue activated the chronic illness rider that was included in her life insurance policy’s living benefits. This allowed her to accelerate part of her death benefit to help pay for the cost of her care and get back to doing what she loves.

Sue could potentially receive:

Base policy death benefit

$500,000

Cash surrender value

$423,957

Sue accelerates 25% of her death benefit, equaling

$125,000

Sue receives a benefit amount of

$105,989

Her remaining death benefit is $375,000 and the remaining cash surrender value is $317,967. If Sue continues to qualify for chronic illness benefits under this rider, she can accelerate up to 25% of the original eligible death benefit or $375,000.2

A terminal illness rider puts Mary's mind at ease

Nothing brought Mary more joy than supporting her grandchildren. She’d built a life centered around family and cherished every moment. At age 50, Mary purchased an IUL policy to help secure her family’s future. At age 70, she was diagnosed with a terminal illness. Her doctors said she didn’t have long to live, maybe two years if she was lucky.3 Hoping to make the most of her remaining time, she decided to accelerate a portion of her death benefit using the terminal illness rider, one of the living benefits her policy offers.

Here’s the potential benefit she could receive:

Base policy death benefit

$300,000

Cash surrender value

$200,959

Mary accelerates 90% of her death benefit, equaling

$270,000

Mary receives a benefit amount of

$249,113

After accelerating 90% of the available death benefit, Mary’s remaining death benefit is $30,000 and her cash surrender value is $20,096.4

A critical illness rider helps Jeffrey pay for treatment

At age 65, Jeffrey was diagnosed with invasive cancer. Faced with significant medical expenses, Jeffrey turned to his IUL policy he purchased when he was 40. His policy included a living benefit rider for critical illness. Jeffrey chose to use the critical illness rider to access a portion of his death benefit early, providing much-needed funds to help cover treatment costs.

Jeffrey could receive:

Base policy death benefit

$400,000

Cash surrender value

$288,981

Jeffrey accelerates 70% of his death benefit, equaling

$280,000

Jeffrey receives a benefit amount of

$202,287

After accelerating 70% of the available death benefit, Jeffrey’s remaining death benefit is $120,000 and his cash surrender value is $86,694.5  

Be ready for the unexpected with living benefits

As we all know, life can bring unexpected challenges. Preparing with a living benefit rider on your IUL policy can help provide you with financial support when you need it most. When faced with navigating critical, chronic and terminal illnesses, these benefits can act as a safety net during difficult times.

Talk with a financial or insurance professional to see if an IUL with living benefits can help you protect yourself now, and protect your loved ones in the future.

1 No additional premium is required for these riders. Riders are subject to state availability. Riders may have limitations, restrictions and availability is based on underwriting criteria. Terminal illness, chronic illness and critical illness riders are available on cases approved at table 4 or better rates. Policies issued with flat extra will not include these riders.

2 The benefit amount is reduced by an administrative fee and an actuarial discount as outlined in the rider. The sample benefits shown are not guaranteed and assumes the current accelerated benefits mortality table, and are based on issue age 35, an initial face amount $500,000 at issue, level death benefit and a crediting rate of 6.84%. Chronic illness occurred at age 67 and Sue exercised 25% of the benefit. If you choose to accelerate the chronic illness rider, both the critical illness and terminal illness riders terminate.

3 Qualifying terminal illness must have a life expectancy of 24 months or less. State variations may apply.

4 The benefit amount is reduced by an administrative fee and an actuarial discount as outlined in the rider. The sample benefits shown are not guaranteed and assumes the current accelerated benefits mortality table, and are based on issue age 50, an initial face amount of $300,000 at issue level death benefit, and a crediting rate of 6.84%. Terminal illness occurred at age 70 and Mary exercised 90% of benefit. If you choose to accelerate the terminal illness rider, both the critical illness and chronic illness riders terminate.

5 The benefit amount is determined by the severity of his illness and the impact on future life expectancy and is reduced by an administrative fee and an actuarial discount as outlined in the rider. The sample benefits shown are not guaranteed and assume the current accelerated benefits mortality table, and are based on issue age 40, an initial face amount $400,000 at issue level death benefit, a crediting rate of 6.84%, and critical illness of lung cancer severity level three. Jeffrey exercised 70% of benefit at age 65. If you choose to accelerate the critical illness rider, both the terminal illness and chronic illness riders terminate.

“F&G” is the marketing name for Fidelity & Guaranty Life Insurance Company issuing insurance in the United States outside of New York. Life insurance and annuities issued by Fidelity & Guaranty Life Insurance Company, Des Moines, IA.

Guarantees are based on the claims paying ability of the issuing insurer, Fidelity & Guaranty Life Insurance Company, Des Moines, IA.

Fidelity & Guaranty Life Insurance Company offers a diverse portfolio of universal life insurance policies and optional additional features. Before purchasing, consider your financial situation and alternatives available to you.

Policy form numbers: 16-LRI-1114, 17-LRI-1115, ICC16-LRI-1114, ICC17-LRI-1115.

The examples are hypothetical, non-guaranteed and are not an indication of the policy’s and/or interest crediting option’s past or future performance.

Issuance may be dependent on answers to the health questions on the application.

Subject to state availability. Certain restrictions may apply.

Surrenders, withdrawals and loans will reduce available death benefit and may be subject to surrender charges. Surrenders and withdrawals beyond basis may be taxable income and subject to penalties if taken prior to age 59 ½. Excessive and unpaid loans will reduce policy values and may cause the policy to lapse. In order to receive favorable tax treatments on distributions made during the lifetime of the insured (including loans), a life insurance policy must satisfy a 7-pay premium limitation during the first seven policy years. A new 7-year limitation will be imposed after certain policy changes. Failure to satisfy this limitation would cause your policy to be considered a Modified Endowment Contract (MEC).

This document is not a legal contract. For the exact terms and conditions, please refer to the contract.

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