Critical illnesses seriously affect the lives of Americans every day. Not only do they disrupt family life, but they wreak havoc on just about anyone’s finances. To put that into perspective, here are some of the costs one may expect to pay for an extended illness:
- Private room in a nursing home – $92,378 per year1
- Assisted living facility (private one bedroom) – $43,539 per year1
- Licensed home health aide (non-Medicare certified) – $46,332 per year1
- Average out of pocket expenses for cancer patient – $20,000 per year2
Fortunately, life insurance can offer a way to help pay for these potential exorbitant costs. In addition to the death benefit, accelerated death benefits (living benefits) can be added to a policy, subject to eligibility requirements. Not only do living benefits offer the opportunity for access to the death benefit while living, but they can be an added sales opportunity for the agent.
The way living benefits generally work is, in short, if the insured were to be diagnosed with a qualifying illness, the policyowner can choose to accelerate a portion of the death benefit3 so they have access to the money while they’re still living.
Midland National has a variety of options for living benefits that vary in coverage, qualifications and complexity. To learn more about living benefits and the options Midland National has available, view our Accelerated Death Benefit Endorsements here on Supply Online. Otherwise, here are a few quickhitting facts about Midland National’s living benefits that may help you and your clients make a betterinformed decision when it comes to life insurance with living benefits.
How does someone qualify for living benefits (accelerated death benefits)?
Written certification from a physician is required to confirm the insured meets the definition of the qualifying event. There is no waiting period after the policyowner elects to accelerate the death benefit, as long as a physician certifies that the insured meets the qualifications for the benefit as it is defined in the endorsement. For complete details regarding the definitions and qualifications of these benefits, please refer to the endorsement form.
How much of the death benefit can be accelerated?
The total amount of death benefit available for acceleration is $1,000,000 per policy.
Do I have to spend the money on medical-related expenses?
Generally, the accelerated benefit payment can be used for any purpose with few limitations or restrictions on benefits.
Are there tax consequences?
Since the accelerated benefits are life insurance proceeds, they are generally tax-free; however there are circumstances that can make them taxable. Midland National does not give legal or tax advice. Please consult with and rely on a qualified legal or tax advisor.
Neither Midland National nor its agents give tax advice. Please advise your customers to consult with and rely on a qualified legal or tax advisor before entering into or paying additional premiums with respect to such arrangements.
1. Source: Genworth 2016 Cost of Care Survey, April 2016. Median cost is quoted.
2. Source: “The High Cost of Cancer Care: Your Money or Your Life?” Newsweek, July 23, 2015.
3. The death benefit will be reduced by the amount of the death benefit accelerated. Since benefits are paid prior to death, a discount will be applied to the death benefit accelerated. As a result, the actual amount received will be less than the amount of the death benefit accelerated. An administrative fee is required at time of election.
FOR AGENT USE ONLY. NOT TO BE USED FOR CONSUMER SOLICITATION PURPOSES.