Financial Strategies to Help Cover the Cost of Serious Illness

A serious illness is one of the few things that can seriously derail a client’s financial aspirations. It can be even more devastating once they retire. But getting them to think about a situation that may never happen can be challenging. It’s difficult to put money towards something they may never need, especially if they have competing priorities.

Fortunately, both life insurance and annuities have riders that can be used to cover the costs associated with a serious illness, and don’t compete with working towards their other financial goals. It’s important to keep in mind that life insurance and annuity riders are not long-term care insurance. Depending on the type of policy, they may differ in purpose, coverage, triggering events and use of funds.

Check out this client-approved article that gives examples of how these concepts work.

Life insurance with the Care4Life Accelerated Death Benefit rider

A common financial goal for clients is to help ensure their loved ones are cared for even if they can’t do it themselves. Life insurance provides this financial protection through the policy’s death benefit. Life insurance can also provide financial protection by offering an accelerated death benefit rider.

Life insurance policies that offer this type of rider supply a practical and convenient way to help meet your clients’ financial needs by giving them part of their policy’s death benefit while they are alive. Most Ameritas life insurance policies feature this type of living benefit. It’s called the Care4Life Accelerated Death Benefit rider. With this feature, your client can use their life insurance while they’re still living.

The Care4Life rider offers several added advantages for your clients.

Easy to explain

The Care4Life qualifying conditions are easy to explain and verify¹:

• Critical illness—invasive life-threatening cancer, stroke, major heart attack, end-stage renal failure, major organ transplant, amyotrophic lateral sclerosis (ALS), blindness due to diabetes, paralysis of two or more limbs, major burns, coma, aplastic anemia, benign brain tumor, aortic aneurysm, heart valve replacement, coronary artery bypass graft surgery.
• Chronic illness—inability to perform two of the six activities of daily living (dressing, toileting, transferring, continence, eating, bathing) or a diagnosis of severe cognitive impairment.
• Terminal illness—a life expectancy of 12 months or less.

Transparent benefit amount

With Care4Life, if your client is diagnosed with a qualifying condition, they will know exactly how much of the death benefit can be accelerated. The amount is based on the qualifying event and the specified amount of their policy. Their life expectancy does not play a role in deciding how much of their policy’s death benefit they can receive.

Qualifying event benefit amount²:

• Critical illness up to 25% of the policy’s specified amount with a maximum of $250,000.
• Chronic illness up to 50% of the policy’s specified amount with a maximum of $1 million.
• Terminal illness up to 75% of the policy’s specified amount with a maximum of $1 million.

The benefit is paid in a lump sum for a critical or terminal illness. Chronic illness payments will be paid in annual payments up to HIPAA limits. If an acceleration of the death benefit is paid, a $250 administrative fee will be deducted otherwise there is no extra cost for the rider to be included on a policy. Fees may vary in some states.

There are no restrictions on how they choose to spend the money they receive as a living benefit from their policy. They are in control and can use the benefit any way they choose.

Impact on life insurance protection

If the accelerated death benefit is taken, the policy will still have value as life insurance. The advanced payment plus an administrative fee plus accrued interest is treated as a lien against death benefit proceeds. In most states, the beneficiaries will receive the death benefit, reduced by the current lien amount. In addition, the policy’s death benefit is guaranteed³ not to fall below 10% of the specified amount when the first acceleration began (not available in New York). Your client must continue to pay the minimum premium to keep the base policy and any riders in force.

Learn more about offering Ameritas life insurance.

Ameritas Income 10 Index Annuity

Saving for retirement is another common financial goal. Your clients want to make sure they don’t run out of money once they retire. That’s where Ameritas Income 10 Index Annuity comes in. It can be an integral part of your clients’ retirement income strategy, not only giving your clients a place to grow and protect their money as they save for retirement, it also provides a foundation for guaranteed income once they retire.

Income 10 provides the potential to earn higher returns with an interest rate that’s linked, in part, to the performance of one or more market indexes.⁴ Your clients won’t lose money due to negative index performance.

In addition, Income 10 features two Guaranteed Lifetime Withdrawal Benefit (GLWB) riders,⁵ available for an added charge, which define how much money they’ll receive from their policy once they retire. Even if their policy value drops to $0, they can depend on this money coming in for the rest of their lives. This is one way to help provide some assurance that they can cover essential expenses such as housing, healthcare and food for as long as they live.

The Income 10 GLWB riders can also help cover the costs of a serious illness during retirement. That’s because, for an added charge, both riders offer a plus option. With the plus option, the amount of guaranteed lifetime income will double if they are unable to perform two of six activities of daily living (bathing, dressing, toileting, transferring, continence and feeding).⁶

Learn more about offering Ameritas Income 10 Index Annuity.

The inclusion of living benefits within both life insurance and annuities offers your clients flexibility to help manage the financial impact of a serious illness. By offering approaches that align with clients’ financial goals and priorities, these living benefits help ensure financial security, regardless of the uncertainties life may present.

Sources and References:
¹In New York and California, Care4Life is offered through three independent riders – Critical Illness, Chronic Illness and Terminal Illness and vary for the Critical Illness rider:

• New York – the Critical Illness rider qualifying events are limited to open heart surgery, angioplasty or myocardial infarction, life threatening cancer, stroke, major transplant or end-stage renal failure.
• California – the Critical Illness rider is only available to insureds age 64 or younger who have comprehensive health benefits from a health insurance policy, HMO or employer plan and the invasive life-threatening cancer is replaced by invasive/metastatic cancer.

²The qualifying conditions for accessing an advance of the policy’s death benefit require the certification of a physician. Recertification of the chronic illness is required annually.
³Guarantees are based on the claims-paying ability of the issuing company.  
⁴Index options are not securities; your client is not investing in stocks or in the indexes themselves. Therefore, credited interest does not include dividends paid by companies included in the relevant index. The credited interest rate is linked, in part, to gains in any combination of indexes.
⁵GLWB riders may vary and may not be available in all states
⁶Annual requalification is required to continue to receive the plus. The plus goes away if your client no longer qualifies, or their accumulation value becomes zero.

In approved states, Ameritas life insurance products are issued by Ameritas Life Insurance Corp. In New York, life insurance is issued by Ameritas Life Insurance Corp. of New York.

In approved states, Ameritas Income 10 Index Annuity (form 2706 with 2706-SCH10) is issued by Ameritas Life Insurance Corp.