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Life Insurance Riders – Live With Your Policy In Force

Life Insurance Riders - Live with your policy in force.

By Byron Udell | July 12, 2017

Most people think that life insurance only benefits those left behind. Not true. There are actually some terrific insurance products that can benefit YOU…the policyholder…while you’re ALIVE.

For years, I have been talking about “How to Win the Game of Life Insurance.” The key to winning the game is six little words: “Die with your policy in force.”

In other words, your family “wins” the game of life insurance if your policy’s premiums are paid in full at the time of your passing. So if your life insurance is in force when you die, your family will receive that policy’s death benefit…income tax-free.

But what about YOU? Yes, you’ve financially provided for your loved ones, but sadly, you personally won’t be around to see the “win.”

Is there an insurance product out there that can benefit me while I’m still here?

Yes. There are certain types of insurance products that let you, in essence, directly profit from the benefits in your life policy while you’re alive and kicking.

The benefit features we’ll discuss in this blog are generally not found in the form of stand-alone policies. They’re called “riders.” Also known as “endorsements,” these specialized policy additions or features are included in an existing product, to expand your benefit options and provide more coverage flexibility when you need it.

With these riders, YOU…not just your family…can financially benefit from this type of life insurance!

Many Universal Life policies offer the option of an Accelerated Death Benefit rider that allows you to collect all or part of the policy’s death benefit while you’re still living. This particular rider can ease the financial burden of paying medical expenses and other time-sensitive bills.

The Accelerated Death Benefit rider has three variations:

Chronic Illness Rider – Similar to Long Term Care insurance, this type of rider allows you to access a portion of your policy’s death benefit, provided you meet the eligibility requirements to collect benefits for long term care-related expenses.

Did you know that 70 percent of people over age 65 will need long term care down the line? And there’s a 91 percent chance that either you or your spouse will need long term care at some point, according to one survey.

Dealing with these long term care issues is certainly not cheap. Not by a longshot. A professional in-home care costs, on average, more than $20 an hour…per person. And a private room in a nursing home can set you back over $100,000 a year.

To qualify for this type of rider, you must need help with TWO or more of the Six Activities of Daily Living (ADL):

• Eating
• Dressing
• Bathing
• Toileting
• Continence
• Transferring

The need for care mostly stems from disability, chronic illness, cognitive impairment, or just getting older.

With the increasing costs of health care, doesn’t it make sense to protect what you have…by getting the insurance policy that will cover the care that you most likely will need down the road?

Critical Illness Rider – Also referred to as “Catastrophic Illness Insurance,” this type of policy will pay out a lump sum cash benefit upon the first confirmed diagnosis of a covered illness, such as a heart attack, stroke, cancer, or HIV/AIDS.

Think a critical illness can’t happen to YOU? Here are some sobering statistics. In the U.S., someone:

• Suffers a coronary eventevery 34 seconds
• Is diagnosed with cancerevery 24 seconds
• Has a strokeevery 40 seconds

And if you think that a critical illness always ends in death…think again. The survival rates for some critical illnesses are not as “critical” as you might think. Check out these survival rates:

• Stroke…75 percent
• Breast cancer…89 percent
• Prostate cancer…98 percent
• Melanoma…91 percent

The benefit dollars from a Critical Illness rider can be used for:

• Paying your mortgage, car loan or credit card bills
• Replacing lost income
• Paying extra medical costs, such deductibles, prescriptions and other out-of-pocket expenses
• Your physical rehab, training or education
• Lodging expenses, if your medical treatments are out of your geographic area
• Child and nursing care
• A vacation while you’re in recovery

You might be thinking: “Hey, I’ve already got health insurance! So I’m good, right?”

Wrong!

Keep in mind that most health insurance policies don’t cover all medical expenses. According to one study, the average out-of-pocket medical expenses that are associated with a critical illness is $7,575!

Let’s run the numbers. If you suffered a heart attack, your average out-of-pocket would be $14,000. If you had a stroke, you’d have to fork out $17,000. Remember, that cash is all out-of-pocket. Your pocket.

In addition, medical insurance won’t replace your lost income while you’re recovering from your illness. And it won’t pay your mortgage or feed your family. In fact, according to another study, nearly two-thirds of all filed bankruptcies are the result of medical expenses. And 78 percent of those people had health insurance.

Most Critical Illness riders cover:

• Heart attack
• Cancer
• Coma
• Stroke
• Permanent paralysis
• Major organ transplant
• Coronary artery bypass surgery
• Angioplasty
• Eyesight, speech or hearing impairment
• End-stage kidney failure

A Critical Illness rider can be a godsend if you get seriously ill. This feature can not only protects your savings, but it can give you and your family financial peace of mind, while you’re on the road to recovery.

Terminal Illness Rider – This feature generally pays out only if the policyholder is expected to die within a limited time period, usually 12 months. Once the proper and official medical diagnosis has been made, the policy will pay out a portion of its death benefit immediately.

Not to be confused with the Critical Illness rider, this particular product only pays out if the policyholder is likely to pass away during that 12-month period. A Critical Illness rider doesn’t have this specific time restriction issue.

How much do any of these riders cost?

That depends on several factors, including age, gender, current health, and the amount of coverage, and how many riders you want. Talking to an insurance professional can help you better determine what type of coverage is just right for you.

If you’d like to find out more about the riders we discussed in this blog, please contact one of our experienced agents here at AccuQuote. We’re here to help.

We only work with highly rated insurance companies – brand names you trust. You may be able to save money without sacrificing quality and strength.