Living Benefits verse No LB.

[Tahoe Ray]

If it one of the "free" riders, everyone i have seen is mortality based. Thst would mean the actual benefit paid would be based on the expected increase in yout mortality that the condition presentd. A stage 1 cancer diagnosis would not pay as much as a stage four.

Right here ^^^

 

[LostDollar]

If it one of the "free" riders, everyone i have seen is mortality based. Thst would mean the actual benefit paid would be based on the expected increase in yout mortality that the condition presentd. A stage 1 cancer diagnosis would not pay as much as a stage four.

Is the insurance company allowed to do this even if the particular rider in the policy makes no mention of mortality basis adjustments in accelerated benefit payout?

 

[Allen Trent]

So


So a terminal illness benefit can help a person basically handle things a bit early with the thought process of death is in the near future but with other living benefits a person could survive and use up the initial desired use of the policy.

So the options sound like if LB is a consideration a high face as possible with LB or a life policy and a CI, or other type of supplemental policy?

Has anyone had first hand experience with a LB issue with a recovery and then dealing with the initial DB needs going forward?

Yes. Some agents in the IUL space promote the IUL with ADB CIA rider as the swiss army knife that allows you to use the cash to supplement retirement tax free & use ADB for LTC costs & have remaining death benefit pay heris tax free.

The problem is while it is true you can use for those various needs it is more of an "or" than "and". Meaning, if I choose to take out cash from age 60-75 to supplement retirement, every one of those distributions most times also shrink dollar for dollar the ADB CIA rider, meaning it won't be there when needed for LTC CIA need & those distributions also dollar for dollar shrink the death benefit, so the death benefit shouldn't be a for sure need that the money must be there to cover am actual need.

 

[Tahoe Ray]

Is the insurance company allowed to do this even if the particular rider in the policy makes no mention of mortality basis adjustments in accelerated benefit payout?

Part of your application has an example of an accelerated payout that you signed.

That becomes part of the policy so check there.

 

[scagnt83]

The problem is while it is true you can use for those various needs it is more of an "or" than "and". Meaning, if I choose to take out cash from age 60-75 to supplement retirement, every one of those distributions most times also shrink dollar for dollar the ADB CIA rider, meaning it won't be there when needed for LTC CIA need & those distributions also dollar for dollar shrink the death benefit, so the death benefit shouldn't be a for sure need that the money must be there to cover am actual need.

Often, the supplemental income is planned so its not causing a significant drop in CV and DB. I can show an IUL (or WL, but ULs using GPT distribute income more efficiently) that helps supplement college costs in 18 years... then helps supplement retirement costs in 40 years... and are still left with a very significant DB in their 90s/100s.

That is ultimately what makes WL and IUL such a powerful tool to utilize over ones life. Its the ability to generate income at higher than usual payout percentages and still leave significant wealth for future generations. Sure you can exhaust the policy and plan income to zero out at age 100. Sure thats what many carriers "suggest" in the illustration software. But you dont have to, and the difference in income between the two scenarios is not that significant. Permanent Insurance is an income tool, not an accumulation tool.

 

[Allen Trent]

Often, the supplemental income is planned so its not causing a significant drop in CV and DB. I can show an IUL (or WL, but ULs using GPT distribute income more efficiently) that helps supplement college costs in 18 years... then helps supplement retirement costs in 40 years... and are still left with a very significant DB in their 90s/100s.

That is ultimately what makes WL and IUL such a powerful tool to utilize over ones life. Its the ability to generate income at higher than usual payout percentages and still leave significant wealth for future generations. Sure you can exhaust the policy and plan income to zero out at age 100. Sure thats what many carriers "suggest" in the illustration software. But you dont have to, and the difference in income between the two scenarios is not that significant. Permanent Insurance is an income tool, not an accumulation tool.

Completely agree in your example, but what about those same policies that had the ADB CIA rider added specifically because the client wants a plan for money for LTC costs. Those are the ones I think that need complete separation & likely split between a no lapse protection focused product to have the ADB CIA rider & the separate policy with accumulation/distribution intentions

 

[rousemark]

Is the insurance company allowed to do this even if the particular rider in the policy makes no mention of mortality basis adjustments in accelerated benefit payout?

LD: The language explaining how the rider works has to be in the policy. Also, I don;t know about other states but in TN the client has to sign a disclosure statement explaining the rider. The problem is everybody signs but hardly anybody reads it and agents do not go into detail.

Here is a Columbian brochure that explains it with two illustrations on page 2

Dropbox - LBR Consumer brochure.pdf - Simplify your life

 

[toolbelt]

If it one of the "free" riders, everyone i have seen is mortality based. Thst would mean the actual benefit paid would be based on the expected increase in yout mortality that the condition presentd. A stage 1 cancer diagnosis would not pay as much as a stage four.

I'm fairly certain that many of these riders are based on a impending death diagnosis. Stage 1 cancer would not be considered an impending death and therefore LB's would not kick in until the later stages of cancer. Let's face it, death is impending for all of us but doubtful we could access LB's voluntarily.

 

[Allen Trent]

LD: The language explaining how the rider works has to be in the policy. Also, I don;t know about other states but in TN the client has to sign a disclosure statement explaining the rider. The problem is everybody signs but hardly anybody reads it and agents do not go into detail.

Here is a Columbian brochure that explains it with two illustrations on page 2

Dropbox - LBR Consumer brochure.pdf - Simplify your life

The key that many agents miss when selling CIA benefits that are "free" is they actually are misleading the buying. just because they have no added premium to put it on the policy, almost all have a charge at the time of claim & the policy has no definitive amount of the charge as the charge is decided by the carrier at the future time. So, if a person accesses $25k of their 100k face amount, the added cost may actually shrink the policy face to $70k or $73k, not $75k like the consumer (and many agents) believe. Most riders have this language like your Columbian example does. I am surprised the % of admin fee doesnt have to be spelled out in the contract as a maximum amount of the fee, etc

 

[LostDollar]

LD: The language explaining how the rider works has to be in the policy. Also, I don;t know about other states but in TN the client has to sign a disclosure statement explaining the rider. The problem is everybody signs but hardly anybody reads it and agents do not go into detail.

Here is a Columbian brochure that explains it with two illustrations on page 2

Dropbox - LBR Consumer brochure.pdf - Simplify your life

Compared to the kinds of things you guys talk about, this is like buying bubble gum at the dime store. All I can do is try to do the best I can for my family with what I have to work with.

It is an Oxford Prosperity Select with a face of $60K. The only reason the insured would agree to the policy was because of the presence of the Nursing Home and Critical Illness riders. (There is also a terminal illness benefit covered in the body of the policy.)

It is my expectation that at some point in the future the insured will receive a full $45,000 in advance benefits under one of those riders. It is my hope that the remaining $15,000 DB and associated cash value will survive any Medicaid spenddown requirements.

The riders do not read like the information you provided. Upon rereading the policy, I do have some confusion about whether the settlements under the riders are monthly payments up to the 75% maximum or whether they are limited to one payment of $4,000 or $2,000 respectively. If it's just one payment, or if your mortality computations apply, the costs of my insurance education just went up significantly.