Chronic Illness & LTCi Riders

Chronic Illness Riders & LTC Riders on Life Insurance policies provide for an acceleration of the death benefit while the insured is still alive. This benefit is triggered by the need for assistance with 2 of 6 activities of daily living (ADL’s), or a cognitive impairment. Like all insurance policies, there are many variations and most are paid riders that add to the premium cost.

  • Chronic Illness Riders are filed for tax purposes as a 101g acceleration of the death benefit. They generally require the need for assistance to be permanent. These riders offer a monthly payout of a certain percentage of the initial death benefit.
  • LTC Riders are filed for tax purposes as 101g and 7702B. This additional filing changes the qualifications required to go on claim. LTC Riders require that the need for care must be for at least 90 days, and does not to be a permanent condition. The maximum monthly benefit for LTC care is calculated using the initial death benefit, divided by the selected number of months of care.
  • No Premium Chronic Illness Riders offer a reduced benefit for chronic illness care with no additional premium. At the time of needing care, the benefit must be elected each year by the policyowner, and can only be paid out as a lump sum. Although there are no additional premiums for this rider, there are costs at the time of claim.