Life Insurance You Don’t Have to Die to Use

Life Insurance For Life
Managing The Details of Illness
The Death Benefit is the most important part of life insurance. It can
provide a reservoir of funds at death to protect your client’s family.

Life Insurance You Don’t Have to Die to Use
Ed Garcia, an Agent for Prosperitas Financial was reminded of the difference life insurance can make in
our lives when one of his clients came to him with horrible news.
Meet Steven Smith
 Steve is a self employed painter with a wife and two
children. He came to Ed in response to a mortgage
protection letter, and purchased a $100,000 policy to protect
his family’s financial security.
 Two years later, at the age of 50 Steve was diagnosed with
lung cancer. He did not have health insurance, and quickly
realized how expensive his illness would be.
“There’s a lot of details in being sick.” – Steven Smith
 Having been told by his doctor that he could no longer paint because the fumes were bad for his
lungs, Steve lost his whole source of income while facing a mountain of medical bills.
 “You’re used to seeing a check come in, and now you don’t have that… what are you supposed
to do? – Steven Smith
 Steve came to Ed for help, and they decided to utilize the Critical Illness benefit. He first
accelerated $50,000 of his death benefit and received a benefit of $41,000. Three months later
he accelerated the remaining $50,000 and received another $41,000.

“What our policy allowed him to do is get better.” – Ed Garcia
 Steve went through chemo, radiation and surgery. Fortunately, his cancer is now in remission,
and he credits this to the fact that he was able to focus on getting better without financial worries.
 “Without this policy they may have had to uproot their family and lose their home.” – Ed Garcia
Talk to your clients today about Life
Insurance with Living Benefits
Contact Sweeting at 864-901-6410
Insurance
You Don’t
Have to Die
To Use
The client’s name was changed to protect privacy.
Covered critical illnesses are heart attack (myocardial infarction), stroke, diagnosis of cancer, diagnosis
of end-stage renal failure, major organ transplant, diagnosis of ALS (amyotrophic lateral sclerosis), or
blindness (corrected vision no better than 20/20 in both eyes). These conditions will vary in some states.
Living Benefits are provided by no additional premium Accelerated Benefit Riders. Riders are
supplemental benefits that can be added to a life insurance policy and are not suitable unless you also
have a need for life insurance. Riders are optional and may not be available in all states or on all
products.
Receipt of Accelerated Benefits will reduce the cash value and death benefit, may result in a taxable event.

Critical Illness

INSURANCE NEWS
AACII: Males Have Higher Critical Illness
Risk
A 25-year-old male non-smoker has a 24% chance of having a critical illness before
reaching age 65 -- and a 25-year-old male smoker has a 49% chance of incurring
such an illness, according to the American Association for Critical Illness Insurance.
Analysts at Milliman Inc., Seattle, included those figures in a national critical illness
risk assessment study prepared for the AALTCI, Westlake Village, Calif.
The Milliman analysts used a definition of critical illness that includes heart attacks,
strokes, and life-threatening occurrences of cancer.
Women face less risk of incurring a critical illness than do men at all ages, the
analysts report.
About 25% of 25-year-old female non-smokers – and 36% of 25-year-old female
smokers -- can expect to suffer a critical illness before age 65.
In addition, about 17% of male non-smokers and 36% of male smokers who reach
age 55 without having a critical illness will be diagnosed with one before turning age
65.
For healthy 55-year-old females, the likelihood of suffering a critical illness before
reaching age 65 is about 12% for non-smokers and 23% for smokers.
By NU ONLINE NEWS SERVICE
Published 1/5/2010 Subscribe to Life & Health
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© Copyright 2010 National Underwriter Life & Health.A Summit Business Media publication. All Rights Reserved. www.summitbusinessmedia.com

Critical Illness Insurance

Critical Illness Insurance – Essential protection for a new era
David B. Berg – Director of Benefit Services
Overview
Over the years we have all experienced the changes in health insurance. Unfortunately health
insurance no longer protects us to the extent that it did even 10 years ago, so it’s no wonder
the primary reason for bankruptcy in the USA is medical expenses. The individual share of
health expenses commonly known as “co insurance” continues to increase as employers and
associations attempt to limit increases in the cost of heath insurance. Unfortunately our share
of medical expenses is often a hidden cost that we don’t discover until after a significant illness
or condition.
What has this increase in co-insurance and other expense sharing requirements do to the
value of our coverage? One consequence of this effort often is that our health insurance has a
maximum out of pocket (OOP) cost that exceeds our ability to pay. This isn’t usually
recognized until we have a major medical expense and we realize that not only do we have out
of pocket costs but that many procedures may not be covered. It is a tragic situation that often
leads to catastrophic financial consequences. However, it is also a sign of changing times when
health insurance may no longer be the “total” coverage we once thought. Not understanding
that your maximum OOP is quite large and that some treatments may not be covered can lead
to some unfortunate situations.
So why does this happen? Many of us do not review the details of our coverage to determine
what our maximum OOP cost could be in the case of a major illness or condition. Since many
plan options now have high out of pocket (OOP) limits and also limit access to specific
treatments, may contain costs on a monthly or annual basis, many employers and employees
select this option. It appears to produce a reasonable premium until a serious medical
condition occurs. We then learn that we are not only responsible for the costs of treatment but
we can no longer afford to pay for them, despite having health insurance. That is an awful
surprise for those of thus that believe we are covered. However this situation is common
enough to have driven a need for a solution.
Why the need for critical illness insurance?
When we realize that our health insurance does not cover all the treatments nor has a very
high out of pocket cost, there are situations beyond paying for the total cost ourselves or
considering bankruptcy. The situation can be solved quite easily with Critical Illness
insurance. Critical illness insurance is medical insurance that pays a lump-sum benefit upon
diagnosis of a critical illness or condition. A critical illness insurance payout helps you avoid
the financial strain a major illness can create so you can focus on your recovery. The policy can be used to supplement your health insurance for the specific main diseases.

Do you have outdated Life Insurance?

Accelerated Benefit Riders and Real World Solutions
By Dan Randall
When considering permanent life insurance, we frequently focus on the illustration and whether the numbers “work”. For pure death benefit sales, what’s the premium to carry the policy to age 100 or age 120? For accumulation-driven sales, what’s the projected cash value in 10 years, 20 years, and what’s the projected income at 65? Often, the sales process is based on a illustration-driven / spreadsheet approach, as opposed to a comprehensive solutions-driven approach.
Under a solutions-driven approach, all policy benefits – not just a low premium or high projected cash value – are fully considered. In addition to a competitive premium or high cash values, policy riders, in particular, Accelerated Benefit Rider Critical Illness, ABR Critical, could be considered a very valuable benefit.
What options exist for clients who have serious, life threatening illnesses, but are not technically considered terminally ill? Clients may consider electing the ABR critical illness rider – where available – to cover expenses associated with their life threatening illnesses. The ABR critical illness rider is intended to qualify for income tax favorable treatment. Whether the benefits qualify for favorable tax treatment may depend on the client’s life expectancy and if the benefits are used for related illness expenses. Clients are encouraged to consult with a qualified tax advisor about circumstances where accelerated benefits may be excluded from federal income tax, and with social service agencies concerning how receipt of such payment will effect their eligibility for public assistance.
How does the client access benefits under the ABR critical illness rider? The definition of a critical illness is slightly different than a chronic illness. Critical illness benefits may be accelerated if the insured suffers a heart attack, stroke, major organ transplant, has been diagnosed with cancer, end stage renal failure, ALS or blindness. There is generally no additional cost, waiting period or additional underwriting for this rider. Based on the severity of the illness – minor to life threatening – the policy owner can elect to receive a lump sum cash payment in exchange for the death benefit. The lump sum benefit for a life threatening illness is approximately 80% of the death benefit – up to certain maximum limits.
What is the inherent cost of ABR Critical Illness to the life carrier? The inherent cost of ABR critical to a life carrier is the cost of paying the death benefit – in most ABR claims – prior to the client’s life expectancy. From a profitability standpoint, paying claims before they are “expected” is less profitable for the carrier. However, if additional business is generated by offering ABR critical, the rider can still contribute towards the underlying profitability of the product line. Also, for those clients electing ABR critical, the accelerated benefit is discounted – on a present value basis – so the carrier would be paying a slightly lower benefit than had the client died with the full death benefit. The challenge is to make the benefit attractive enough to elect, yet trying to maintain maximum profitability for the carrier.
Why is the ABR critical illness rider a valuable benefit to the client? Experimental treatments, alternative medicine, and international medical care may be not be covered under your clients’ health insurance, but could qualify as life threatening illnesses under the ABR critical illness rider. Consider the following example as a possible application for the ABR critical illness rider:
Prescription medication must be approved by the FDA before it becomes available to U.S. consumers. Typically, the FDA drug review process may take 12 – 30 months.1 If the medication is not approved by the FDA, generally, it will not be covered by health insurance.
Experience