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