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The purpose of this communication is the solicitation of insurance. Contact will be made by an insurance agent or insurance company.
When the insured becomes chronically ill and is eligible to receive benefits, he/she can access a portion of the policy’s death benefit every month. The monthly benefit amount can be used at the policyholder’s discretion. Monthly benefit payments will lower the policy’s death benefit and other policy values. In addition, cost of insurance, monthly charges for any riders, and monthly expense charges for the policy will be waived while claim requirements are met.
Chronically ill means a licensed health care practitioner has certified that the insured:
- is unable to perform at least 2 activities of daily living (as defined in the rider) without substantial assistance, for a period of at least 90 days due to a loss of functional capacity; or
- requires substantial supervision to protect the insured’s health and safety due to severe cognitive impairment.
Let’s see how it works:
To understand how this rider can help pay for your long-term care expenses, let’s look at a hypothetical example. Melinda was healthy and active until she suffered a stroke and, as a result, became chronically ill. To continue living in her home, Melinda needed part-time care five days a week, at $18.50 an hour2, for the remaining four years of her life. She also had to pay for services that she could no longer do on her own, such as housecleaning and yard work.
Fortunately, she had a Universal Life policy with a $250,000 death benefit and a Flexible Care Benefit rider and qualified to receive benefits. She chose to receive payments of $4,000 per month.3
|WHAT WAS THE COST OF MELINDA’S CARE?|
Home health care:$148 per day x 5 days a week x 52 weeks for 4 years
|Other living expenses (house cleaning, yard work, etc.)||$7,500|
|HOW MUCH DID MELINDA AND HER BENEFICIARIES RECEIVE?|
|Flexible Care Benefit rider benefit - $4,000 per month x 12 months for 4 years||$192,000|
|Melinda’s death benefit ($250,000 - $192,000)||$58,000|
In this example, Melinda opted to receive a larger monthly benefit than her actual long-term care expenses. Even after providing benefits to help cover those expenses, her life policy still paid a sizeable lump sum to her loved ones.
It is possible that benefits provided by this rider maybe be taxable. The policyholder should consult their personal attorney or tax advisor.
For details about the cost, coverage, and limitations, see a State Farm agent.
1Flexible Care Benefit rider is the marketing name for Accelerated Death Benefit for Long-Term Care Rider in all states, except it is known as the Accelerated Benefit for Long-Term Care Rider in KY and Advanced Death Benefit for Long-Term Care Rider in IN.
2Based on average cost of home health aides. Genworth Financial. Genworth Financial Cost of Care Survey. Conducted by CareScout, an independent research firm. (April 2009).
3The maximum monthly benefit is the lesser of:
- Two percent of the life insurance death benefit (at the time of the claim) and
- IRS per diem amount ($300/day in 2011) times the number of days in the month. (Not applicable in Canada)
The policyholder can choose a lesser amount, subject to a monthly minimum defined in the rider.
Universal Life policy series 11030, 11080, A11030, and A11080.
Accelerated Death Benefit for Long-Term Care Rider, used with Universal Life, policy series 10220 and 10520.
Insurance policies and/or associated riders and features may not be available in all states, and policy terms and conditions may vary by state.
Accelerated Benefit for Long-Term Care Rider, used with Universal Life, policy series 10220 in KY and A10220 in WI.
Advanced Death Benefit for Long-Term Care Rider, used with Universal Life, policy series 10220 in IN.
Accelerated Benefit for Long-Term Care Rider, used with Universal Life, policy series 10220-12 in ID.
LIMITATIONS AND EXCLUSIONS PROVISION for policy 10220-12: The Monthly Benefit will not exceed the Maximum Monthly Benefit. No Monthly Benefit will be paid for a period more than 12 months prior to the date We receive a Request for benefits under this Rider. No Monthly Benefit will be paid for any loss that: starts before the Effective Date of this Rider; results from an attempted suicide, while sane or insane, or intentionally self-inflicted injury; results from the Insured’s alcoholism or addiction to drugs or narcotics; but not addiction which results from the administration of those substances in accordance with the advice and written instructions of a Licensed Health Care Practitioner; occurs or continues while the Insured is living outside of the United States of America or its territories or possessions; results from the Insured’s participation in a felony, riot or insurrection, or involvement in an illegal occupation; occurs or continues during the Insured’s incarceration; or results from any act due to war whether or not the Insured is in the military service. “War” means declared or undeclared war or conflict involving the armed forces of one or more countries, governments, or international organizations.
State Farm Life Insurance Company (Not licensed in MA, NY or WI)
State Farm Life and Accident Assurance Company (Licensed in NY and WI)