The life insurance products in question go by various names - life insurance for the living, living needs policies and accelerated death benefits
. Like traditional life insurance, living needs policies pay beneficiaries on the death of the insured.
* Accelerated death benefit
In this type of buy-sell arrangement, adding a LTC rider (accelerated death benefit
feature based on the LTC triggers) is an inexpensive way to get LTC benefits.
However, a blow to the product was delivered when most companies later adopted the "terminal illness accelerated death benefit
" to address the critical illness exposure.
Today, some insurers are offering riders in addition to the accelerated death benefit
riders that restore the initial death benefit or extend the LTC benefits to twice the original maximum benefit period.
281 would let an insurer sell a life insurance policy with a provision or rider designed in such a way that the policy would pay accelerated death benefits
, or "special benefits," when the insured came to need institutional care and was expected to need institutional care for the rest of his or her life.
With the addition of the LTC rider, which could add up to another 4 years of coverage, the overall amount of LTC protection (accelerated death benefit
+ LTC rider) is equivalent to up to 6 times the original asset: $100,000 + (4-year rider @ $50K/yr = $200,000) = $300,000 or 6 years of $50,000.
Today, many policies offer accelerated death benefit
riders that can provide a terminally ill insured with an advance on the death proceeds prior to death.
Several other benefits are included with the protector Series at no additional cost, including common carrier accidental death benefit, which provides additional payments if death occurs as a result of certain accidents, and an accelerated death benefit
, which provides early access to up to half of the death benefit prior to death if the insured individual is diagnosed as terminally ill.
It can be combined with accelerated death benefit
options to allow early access to benefits without affecting guarantees.
Accelerated Death Benefit
Rider: A rider that lets the policyholder collect a portion of the policy's death benefit if he or she becomes terminally ill with a short life expectancy, such as one year.
Disability insurance, life insurance and life insurance policies with accelerated death benefit
provisions can help families cope with these sorts of financial hits and fill in the many gaps left by Social Security disability benefits and employer-sponsored disability plans.