LIFE INSURANCE WITH
LIVING BENEFITS RIDER
Have You or a Loved One Purchased a Living Benefits Rider?
- Have you purchased a life insurance policy with a living benefit or chronic illness rider?
- Have you been promised disability insurance but have instead been sold a life insurance policy with a living benefit rider?
- Were you promised that your living benefit rider will pay for end of life care and funeral expenses?
- Were you promised that you will receive advance payment on your life insurance policy if you have a terminal illness?
- Were you sold a long-term care policy?
- Were you sold an accelerated death benefit policy or rider?
- Were you provided a living benefit rider when you were already chronically or terminally ill, yet provided a high life expectancy rate?
We have filed and are in the process of filing additional lawsuits against several life insurance companies where the policyholders have been misled into one or more of the situations discussed above. If you answer “yes” to any of the above questions and whether or not you or a loved one have been directly affected by not receiving what you believed you would receive, contact our experienced insurance attorneys today and set up a consultation to evaluate your life insurance policy and the side car riders so that your rights are protected!
What is a Living Benefits
Life Insurance Rider?
A Living Benefit Rider is a twist, or rather a side car, to a life insurance policy. It provides chronically or terminally ill policyholders with access to an advance on a portion of the policy’s death benefit. This type of a rider allows you to use a portion of your death benefit if you become chronically ill and cannot perform at least two of six activities of daily living (ADLs). These ADLs include bathing, continence, dressing, toileting, eating, and transferring.
Similarly, a critical illness rider allows you to receive some or all of the death benefit if you are diagnosed with an illness or medical condition specified in the policy. Common critical illnesses include heart attack, stroke, cancer, end-stage renal failure, ALS, major organ transplant, blindness, or paralysis. With some critical illness riders, the percentage of death benefit available to you is based on the type of illness you have.
In any of the above cases, a living benefit rider, which may be exercised only once, will reduce the available cash surrender value and the death benefit of the policy.
Does a Living Benefits Rider Actually Provide a Living Benefit?
While the premise of the rider seems relatively straightforward in how much you will receive, it is very complex in its formula of determining what it takes to qualify and how much you will actually receive. An example of this problem is a potentially young policyholder who may be chronically, critically or terminally ill, and exercises his/her right to receive his living benefit amount. What the policyholder will actually receive is an accelerated amount reduced by a higher than standard mortality rate due to his young age. This mortality rate does not account for his illness and will leave him/her with pennies on the dollar while reducing the actual death benefit in the entirety of the exercised amount. So, if the policyholder requests the maximum amount on a $1,000,000.00 policy, which may be $240,000.00, he may receive only $5,000.00 with the outrageous deductions mentioned above but his death benefit will still be reduced by $240,000.00.
Another example of this complicated formula is when the exercised living benefit amount is based on a life expectancy rate outside the term of the policy. In this situation, a policy may be for only 30+ years, yet if the life expectancy is 35 years, the insurance company will use the 35+ years to calculate the deductions. Usually, after 30 years, the annual policy premium is extremely high. In this example, the policyholder’s living benefit amount will have a substantial deduction because of the extra 5+ years taken into the calculation, yet the death benefit is again reduced in the entirety of the claimed amount.
Both of these scenarios, and many others, including unwarranted denials are simply not right!
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