Terminal Illness Rider: Life Insurance's Lesser-Known Benefit

Life insurance riders are an easy and affordable way to get additional coverage without needing to complete additional applications or exams. One such rider is the terminal illness rider, which can be added to a life insurance policy to provide financial relief to those diagnosed with a terminal illness. Terminal illness is defined as a disease or condition that cannot be cured and will most likely lead to death. The terminal illness rider allows those diagnosed with a terminal illness to access a one-time acceleration of up to 50% of the death benefit from their life insurance policy, providing much-needed financial support during a difficult time. This rider can help lift the financial burden of medical costs and treatment, allowing patients and their families to focus on what matters most.

Terminal illness riders can be used during the policyholder's lifetime

The terminal illness rider offers a one-time acceleration of a portion of the death benefit from the life insurance policy, typically up to 50% or a maximum of $250,000. While there is generally no additional cost for this rider, there may be a one-time administrative fee that reduces the amount received. It is important to note that accessing this benefit during the policyholder's lifetime will result in a reduced death benefit for beneficiaries.

To qualify for the terminal illness rider, the policyholder must meet certain requirements. The policy must have been in force for a specified period, typically two years, and there must be a minimum amount of time remaining until the maturity date. Additionally, a Licensed Physician must certify in writing that the policyholder's medical condition is expected to result in a life expectancy of 12 months or less. In some states, such as Illinois, the life expectancy requirement may be longer, such as 24 months or less.

The process for receiving the benefit typically involves submitting proof of the medical diagnosis and meeting the terms and conditions outlined in the policy. Once qualified, there are generally no restrictions on how the funds are used, providing flexibility for the policyholder to cover various expenses associated with their illness.

It is worth noting that not all life insurance policies automatically include terminal illness riders, and they may need to be added at an additional cost. Some policies may include this rider at no upfront cost, but a fee will be incurred if and when the rider is exercised. When considering a life insurance policy, it is essential to review the specific terms and conditions to understand the availability and details of any included riders.

They provide financial relief to patients and their families

Terminal illnesses can be financially draining for patients and their families. The treatments, medications, hospital stays, and doctor's visits can be costly, and the patient may be unable to work during this time, resulting in a loss of income. This is where a terminal illness rider on life insurance can provide financial relief.

A terminal illness rider allows individuals diagnosed with a terminal illness to access a portion of their life insurance benefits while they are still alive. This means that if an individual is facing a terminal illness, they can receive a payout from their life insurance policy to help cover the costs associated with their illness. This can include medical expenses, treatment costs, and other financial obligations.

The amount that can be accessed through the terminal illness rider varies but is typically a percentage of the death benefit, with a specified minimum and maximum amount. For example, the terminal illness rider offered by Corebridge Direct allows individuals to access up to 50% of the death benefit, with a maximum payout of $250,000. There may also be a one-time administrative fee associated with accessing the benefit.

The funds received through the terminal illness rider can be used to cover outstanding debt, medical expenses, and other financial needs. This can help reduce the financial burden on the patient and their family, allowing them to focus on spending time together and seeking the best possible care without the added stress of financial worries.

It is important to note that accessing the terminal illness rider will typically reduce the death benefit that the beneficiaries will receive. Therefore, individuals should carefully consider their situation and ensure that their loved ones will still receive an adequate payout after accessing the rider benefit.

Riders are a convenient and cost-efficient way to get additional coverage

There are several different types of riders, and some are free while others come at an additional cost. For example, the Terminal Illness Rider can provide financial relief to patients and their families in the event of a terminal diagnosis. It offers a one-time acceleration of up to 50% of the death benefit from your life insurance policy, with a maximum payout of $250,000. This money can be used to cover outstanding debt from treatment, doctors' visits, hospital stays, and other expenses. The terminal illness rider can help alleviate financial stress, allowing families to focus on spending time with their loved ones.

Another example is the Accidental Death Benefit Rider, which pays an additional death benefit on top of the existing policy in the event of an accidental death. This rider can provide financial support to loved ones, helping to ease the burden of funeral costs and medical bills. Similarly, the Child Rider allows parents to add their children to their policy and receive a pre-determined death benefit should the unthinkable happen to their child. This can provide financial support during an emotionally difficult time.

Riders like the Waiver of Premium Rider can also provide financial relief in the event of total disability. With this rider, policyholders can continue their coverage without having to make premium payments. This can be especially helpful in situations where unexpected changes or sudden disabilities make it difficult to keep up with expenses.

It's important to note that adding riders may result in higher premiums, and it's essential to carefully consider the potential impact on the payout received by loved ones in the event of your death. Nonetheless, riders offer a valuable opportunity to customise and enhance your insurance policy, ensuring that it better fits your specific needs and circumstances.

They can be purchased as an add-on or included directly in a policy

Life insurance riders are a convenient and cost-efficient way to get additional coverage without having to complete additional applications or exams. Some types of life insurance riders can be added or dropped at any time, while others are only available when your life insurance policy is first issued.

Some riders can be purchased as an add-on, while others are included directly in a policy. Riders purchased as an add-on will usually cost the policyholder an extra charge upfront in the form of a periodic fee. However, this type of benefit will pay out the full amount stated in the policy.

Riders that are included directly in a policy are known as "no-cost" riders. These are simply riders that are paid at the time of the claim. The insurance carrier will discount the dollar amount of the benefits paid to the policy owner according to a formula that takes interest and mortality rates into account, as well as the amount of cash value in the policy.

While "no-cost" riders are not initially charged to the policyholder, they do come at a cost. When the time comes to pay out, the insurance carrier will discount the dollar amount of the benefits paid out.

The Terminal Illness Rider is available as an add-on to life insurance policies through Corebridge Direct. It can be used during the lifetime of the policyholder, providing a one-time acceleration of up to 50% of the death benefit from the life insurance policy (not exceeding $250,000). A one-time administrative fee (not exceeding $250) will be deducted from the amount received.

Riders can be purchased at the same time as the policy or added later

Riders can be added to either a term life insurance plan or a whole life plan, but some riders only work with one type of life insurance. For example, the term conversion rider allows policyholders to change their life insurance plan from term life to whole life before the end of the term. Riders can also be dropped at any time, and some are only available when the life insurance policy is first issued. For example, the accidental death benefit rider must be purchased at the same time as the policy is issued, but the waiver of premium rider can be added at the same time as the policy is issued and dropped at any time.

It's important to note that adding riders may result in a higher premium. Additionally, it's crucial to understand how the rider affects the amount of money that loved ones will receive in the event of the policyholder's death.

Frequently asked questions