Why Business Owners and Key Employees Need to Purchase Hybrid Term Insurance with Living Benefits

October 2018 – Minneapolis, MN

By Brian Emswiler

Good News for Smart Business Owners!

Just announced! Certain life insurance companies now offer a hybrid term life insurance policy that will allow you to spend a portion of the death benefit in case of heart attack, cancer, stroke, major organ transplant, or kidney failure. These “living benefits” can also be used to pay for long term care expenses, such as those needed to help with activities of daily living or because of a severe cognitive issue. Finally, benefits can also be triggered with the diagnosis of a terminal illness. The benefit is paid out in cash to the client, tax-free and with no extra cost.

This one hybrid life insurance product covers a multitude of health events that, if unplanned for, could wipe out a business or decimate your personal savings. It’s a great tool to utilize in buy/sell or key-man agreements to protect business owners in case of health issues, disability, or death.

According to the Centers for Disease Control, chronic diseases such as heart disease, stroke, and cancer are among the most costly health problems in the U.S. today. Should you become chronically ill during the policy term, the carrier would advance up to 90% of the policy’s coverage amount. This money can then help pay for needed medical treatment, long term care, or replace any lost income.

In order to qualify for this benefit, a licensed health care practitioner must certify that you are unable to perform at least two of the six activities of daily living. These ADL’s are defined as bathing, continence, dressing, eating, toileting, and/or transferring. If you are seeking traditional long term care insurance but find it unaffordable, you may wish to consider this new strategy which combines life insurance with long term care benefits.

Explanation of Benefits

Critical Illness Accelerated Death Benefits—if you were to suffer a critical health condition such as cancer, heart attack, stroke, or paralysis, you could be eligible to receive accelerated death benefits from your policy. As stated earlier, the company will advance up to 90% of the policy’s coverage amount, provided a licensed physician certifies that you are critically ill.

Terminal Illness Accelerated Death Benefits—this benefit is for terminal conditions where a licensed physician has indicated you have less than 12 months to live. This will trigger an advance up to 100% of the policy’s face amount. This type of benefit has been available for some time, and is a very commonly included in most term life insurance policies. Amounts and terms will vary by company.

Both of these options include limitations with regards to the amount and frequency of payments. For instance, although chronic illness benefits allow for up to 90% of the face amount, it is still limited to a maximum of 24% per year. Other limitations may also apply based on individual circumstances. There are many factors that life insurance companies will take into account when evaluating your request for accelerated death benefits. As with anything, it’s a good idea to get a solid understanding of these benefits now. Don’t wait for a chronic illness to strike to learn how your policy works—get started today.

Brian Emswiler is President and founder of Long Term Care Insurance Advisors, Inc. He has successfully operated this business for over 25 years. Brian specializes in long term care insurance, life insurance, Medicare supplements, and health insurance. Brian has built a solid reputation as a leader in the insurance industry. To learn more about Long Term Care Insurance Advisors, Inc., visit www.ltcadv.com or call (952) 937-9127 or email be@ltcadv.com.