A chronic illness rider is an additional level of coverage that many of the top life insurance companies in the U.S. will offer to their clients purchasing a term or whole life insurance policy.  Chronic illness riders will usually have to be purchased because this additional coverage is not typically provided in a stand-alone life insurance policy.

As a result, the vast majority of individuals purchasing traditional life insurance coverage fail to purchase this additional rider, usually because they weren’t made aware of this option when initially applying for coverage.

For this reason…

We want to take a moment and discuss what a Chronic Illness Rider is and provide some real-world examples where having such a rider added to one’s policy can be quite beneficial to all those involved.

Questions/topics that will be addressed within this article will include:

• What is a Chronic Illness Rider?
• What qualifications would someone need to meet to qualify for this benefit?
• How can it be helpful to a living insured?
• How can it be helpful to one’s beneficiaries once you’re gone?
• How can you be sure if purchasing a life insurance policy with a Chronic Illness Rider is a good idea for you?

What is a chronic illness rider?

A chronic illness rider is a type of insurance policy rider that provides additional coverage for individuals with chronic illnesses. A chronic illness is a long-term medical condition that is typically ongoing or recurrent. Some examples of chronic illnesses include diabetes, asthma, and HIV/AIDS.

A chronic illness rider can provide coverage for things such as additional medical care, medication, and home health care. These riders can be added to a life insurance policy, disability insurance policy, or long-term care insurance policy.

Now we should point out that…

This is a rather “generic” definition of what a Chronic Illness Rider is because we’re only trying to covey the “general” meaning of what a Chronic Illness Rider is because most Chronic Illness Riders will vary from insurance company to insurance company.

 For this reason…

If you do choose to purchase a life insurance policy with a Chronic Illness Rider, some of the things you’ll want to be sure about is:

• What qualifications would someone need to meet to qualify for this benefit?
• Is there a percentage limit that one can take?

What qualifications would someone need to meet to qualify for the chronic illness rider?

The qualifications to use a chronic illness rider on a life insurance policy will vary depending on the specific policy and insurance company. However, its safe to assume that in order to be able to use a chronic illness rider, you will need to meet certain criteria, such as:

• First you will need to be diagnosed with a chronic illness that is covered by the policy.
• Second, this chronic illness must be severe enough to prevent you from being unable to perform at least two activities of daily living (such as bathing, dressing, or eating). without assistance, or requiring substantial supervision due to cognitive impairment.
• Third, most chronic illness riders will require one to demonstrate that their condition is truly “chronic” which likely means that the policy will contain a waiting period during which time your condition much continue to meet all of the criteria to qualify for coverage.
• Lastly, because each insurance company will likely have their on criteria list whcih must be met, your condition will need to encompass those requirements as well.

How can it be helpful to a living insured?

Now at this point, there may be some folks reading this who are wondering “why” gaining early access to one’s death benefit as an “accelerated benefit” is all that beneficial. Especially given that fact that by doing so they will be reducing the overall death benefit of their life insurance policy that would be left to their loved ones’ when they die.

This is why…

We want to take a moment and list just a few reasons an insured might like to gain access to one’s death benefit before they die so that they can use this money as a way of covering one’s medical expenses as well as mitigating one’s losses.

For example…

If someone has been diagnosed with a serious chronic illness, there is a very good chance that they may not be able to continue to work full time. As a result, having early access to one’s life insurance death benefit can provide a family time to:

• Cover any potential “lost wages” as a result of their unemployment.
• Pay current expenses that are still due such as rent, a mortgage, car payments, etc…
• Pay any medical bills that are accumulating.

As well as provide one’s family with time to prepare to adapt to a new reality that may include your inability to work full time like you once did.

One thing that…

We should also mention is that early payments from your life insurance policy received through a chronic illness rider are generally NOT taxed as income. However, these payments may affect one’s eligibility for Medicaid and/or SSI Disability benefits, which is why one should always consult with their financial advisor or tax advisor before choosing to take advantage of this opportunity.

How can a chronic illness rider be a benefit to one’s beneficiaries once you’re gone?

Early access to one’s death benefit can also be quite helpful to one’s beneficiaries as well.   Especially if one’s beneficiaries have been dependent upon you as the primary “bread earner”.

This is because…

By gaining early access to your death benefit, you’ll be able to work with your loved ones, helping them prepare for a future without you working full time while simultaneously setting things up for them so they don’t get lost along the way.

Additionally…

It’s probably safe to say that most families don’t spend a huge time talking about how they would manage if you did become chronically ill or passed away prematurely.

So, by having access to funds like these will often help facilitate these “types” of conversations because now you have access to money that will let you proactively do something about this possible inevitability.

How can you be sure if purchasing a life insurance policy with an additional Chronic Illness Rider is a good idea for you?

In our experiences here at IBUSA, we have found that only you and your family will be able to ultimately decide if purchasing a Chronic Illness Rider is going to be the “right” decision for you.

The good news is…

That if you find yourself having this discussion, it probably means that you are doing your due diligence while shopping for life insurance, which means you’re probably off to a great start.

Which is why our only advice to you would be to first determine “which” life insurance companies are probably going to provide you with the best price for your insurance based on your health and any possible pre-existing medical conditions you may or may not have and then see what it might cost to add a Chronic Illness Rider to it.

What you might find is…

Some companies may choose to offer this as a relatively inexpensive option to encourage new customers to choose them over their competitors, in which case choosing NOT to take advantage of this option simply wouldn’t make sense for most individuals.

The good news is…

When you give us a call here at IBUSA, we’ll be happy to go over all of your options with you and help you find those particular companies that like to use living benefit riders like a Chronic Illness Rider as a way of making them a little bit “better” than their competition!