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Life Insurance With A Chronic Illness Rider

chronic illness rider

Written By Doug Mitchell

Doug Mitchell, CLU holds a BA degree in Finance from Auburn University as well as having obtained a Chartered Life Underwriter (CLU) designation from The American College in Bryn Mahr, PA.  Doug has spent close to 30 years in the insurance and financial planning industry and has held licenses to sell securities, long-term care insurance, health.  Doug is also a financial blogger addressing the topics of life insurance, annuities and retirement income planning.

Holly Mitchell  &

Holly Mitchell’s background in life insurance insurance goes back to 1985 when she worked for her father who was a New York Life agent. Holly has a marketing degree from Auburn University and has had a life insurance license since 2008. In addition to advising life insurance for customers all around the country, Holly is our website fact checker.

Rob Pinner   &

Rob Pinner is the founder and CEO of Pinner Financial Services servicing all 50 states. Rob started his insurance career in 2002.

Louis LaBash

Results-driven and innovative life insurance professional with 30 plus years of life insurance industry sales and marketing experience. Recognized as a pioneer in the field, leveraging phone and internet channels to exceed personal sales of over $100 million during the first decade of the 21st century. Creator of a highly effective intuitive IUL life insurance sales software that facilitated the sale of millions of dollars of indexed universal policies by numerous life insurance agents. Proven track record as a Managing General Agent (MGA), Life Agent, IUL Life Insurance Sales Software developer, and leading-edge creator of insurance marketing tools, educational content, and delivery systems.

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Many life insurance companies offer a terminal illness rider.

Such a rider allows the insured to use a portion of their death benefit while they are still alive. This is possible if a doctor deems the policyholder terminally ill.

Terminal illness riders are usually included with most life insurance policies at no additional cost. However, some life insurance companies have come out with riders that allow even more flexibility in using death benefit while the insured member is still alive.

In this article, I want to highlight some features provided for the chronic illness rider. These are included with all life insurance policies from North American Life & Health Insurance Company.

No one thinks of life insurance as an attractive investment until they’ve lost a loved one they were dependent on. And then it’s too late.

You should make it a high priority to be properly insured so that your family has the money they need if something happens to you.

How A Chronic Illness Rider And Accelerated Benefits Work

When a chronic illness rider is included in your life insurance policy, you don’t need to be terminally ill to use your death benefit while you are alive.

You can withdraw cash from your death benefit after suffering serious health complications. An example could be if it puts you in need of assisted living or supervision for at least 90 days.

This feature is not only versatile but also highly transparent and user-friendly.

Those who apply for a cash payment will know how much they receive and how it will affect their death benefit value immediately.

This feature is an accelerated death benefit endorsement (or an ADBE). It allows the insured to push for a portion of their death benefit amount when they suffer a debilitation that impairs their ability to accomplish their daily routines.

Debilitating life events such as major accidents can alter our way of life and quickly become financially taxing. So this rider allows the insured to accept a part of their death benefit while they’re still living.

Best of all, those who opt in for this benefit after a serious medical event can receive a quick one-lump sum payment. This is called an election and is annually based on their coverage.

In addition to this chronic illness rider, those with North American Company also have access to more traditional riders offered.

One of these is the terminal illness rider, which provides cash if you are in a qualifying condition.

Considerations For Applicants With A Chronic Illness Rider

Of course, you won’t qualify for life insurance if you are already chronically or terminally ill.

It can be nearly impossible for those who are ill or elderly to find a new policy.

Bearing that in mind, the key is to have the coverage in place before the need arises.

Consider that having a policy with a chronic illness rider can be a good alternative to buying a long-term care policy.

Life insurance with a chronic illness rider generally won’t have as robust of a coverage as a stand-alone long-term care policy. But the cost can be significantly cheaper while providing both long-term care coverage and a life insurance death benefit.

Long Term Care policies have become increasingly expensive. And insurance companies are scaling back the benefits of those policies. So a type of “hybrid” life insurance policy has gained in popularity. It offers both a death benefit and chronic illness coverage.

There are other benefits of having life insurance and long-term care. For example, if you never need the long-term care coverage, you still have a death benefit.

This is unlike traditional long-term care policies. Traditional ones don’t provide any benefits if you don’t end up needing the coverage.

This improved sense of equity has become a leading contributor to the increasing demand for hybridized policies.

How Much Life Insurance Do You Need?

It’s important you have the additional riders for your coverage. But it is not as important as determining how much life insurance to buy in the first place.

Any amount is better than nothing. However, you don’t want something to happen to you and leave your family with too little insurance to cover their needs.

There are several factors to consider in how much money your family will need when you pass away.

The first numbers to consider are current debts and an estimation of final expenses. Because the first goal of life insurance is to cover your liabilities so that they aren’t left as burdens to your family.

Add up your mortgage, business loans, student debts, and any other major expenses.

Make sure your policy is large enough to cover all of those bills without leaving any of them to your family.

The next goal of life insurance is to replace your income for anyone who is dependent on it.

If the income you earn is the primary source of money for your family to make ends meet, then it would be a real struggle for them if something were to happen to you.

Make sure your policy will give your family enough money to pay the monthly bills and expenses for a long time.

The last number you should add is any funeral bills or expenses. The average funeral costs $10,000.

Most people don’t have that kind of money around to spend on funeral expenses.

Your life insurance should cover the amount your family will need to pay for your burial without emptying the savings account.

How Much Do Riders Cost?

As you shop for life insurance, getting the best premium rate possible is an obvious objective.

Adding chronic illness or long-term care riders normally causes the monthly premium rates to increase.

Most companies add charges for every rider. However, some companies can include riders on your plan at no additional cost.

The amount you’ll pay for the riders will differ depending on the company you choose. Just like with a life insurance policy.

Each company has different rating systems they will use to calculate premiums. Some companies will charge more for riders compared to what other companies charge.

Total premium amounts can vary by a lot from company to company.

The key to finding the most affordable life insurance and riders available is to compare several quotes from several companies to determine what is the best fit for you.

It can be a tedious process to contact numerous insurance companies and compare all the details of their offers.

A better way to get the information and comparisons you need is to work with an independent insurance broker. Independent brokers can help you save a lot of time by doing the work for you.

It is important to note the difference between an independent broker and a traditional agent, which is a broker has access to many different companies while a traditional agent typically only represents one company and will only offer rates from that one company.

Our independent brokers can offer competitive rates from a wide range of insurance companies.

It’s impossible for us to say how much you would pay for your rider. In most cases, riders are extremely affordable to add.

Some riders will only add a couple dollars to your premiums every month. These plans can be the perfect way to fill in some of the gaps your life insurance doesn’t cover.

Bottom Line

We’re here to help any way we can, so don’t hesitate to let us know about any further questions you might have about chronic illness or long-term care riders for your insurance.

There are over 800 life insurance companies on the market, and each of them has different insurance products that we can help you sort through quickly.

Getting the best coverage for your loved ones is what we take great pride in doing every day.

Whether it be finding the cheapest plan or the best options for riders, we can help you save a lot of time and money on your insurance.

Use the quote tool on this page to compare life insurance, or contact us to discuss quotes, answer your questions or apply for life insurance at 800-712-8519. 

Picture of Doug Mitchell, CLU

Doug Mitchell, CLU

Doug Mitchell, CLU holds a BA degree in Finance from Auburn University as well as having obtained a Chartered Life Underwriter (CLU) designation from The American College in Bryn Mahr, PA. Doug has spent close to 30 years in the life insurance and financial planning industry and has held licenses to sell securities, long-term care insurance, health. Some other notable items about Doug: Top of the Table Million Dollar Round Table member (MDRT). (MDRT is a global, independent association of the world’s leading life insurance advisors) | Premier Partner with Lincoln Financial and Cabinet Member | Served two years as President of the Auburn/Opelika Association of Financial Advisors | Life Millionaire status at Horace Mann Insurance Company and was awarded the Life Agent of the Year Award | New York Life, Executive Council Member | Currently serves as President of Ogletree Financial, a life insurance General Agency. | Doug is also a financial blogger addressing the topics of life insurance, annuities and retirement income planning.

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