Jul 3, 2018
Could an IUL with Living Benefits be a replacement to a stand alone Cancer policy, etc?
Not a replacement... but it really depends on what their priorities are. It's not uncommon to cancel supplemental health policies in favor of other policies or strategies that are a higher priority for them.
Also, you'd have to take a look at the critical illness rider in the event of a cancer diagnosis.
If they don't mind losing their death benefit if they have a cancer claim that they collect..
Right. Depending on what size policy, you could potentially file a claim and still have a decent DB. I have a client that did it.
Have a lady in her 40's that wants a Cancer policy. But for like $15 more a month - she can get an IUL with Living Benefits that would also cover Chronic, Critical & Terminal Illnesses - not just Cancer . . . Plus - the Death Benefit if she never uses it . . .
They wouldn't lose all the DB. Could accelerate 70% and keep 30%, etc . . .
That is true.. Another thing to consider is you do not know in advance how much those things will pay. Say a client has $100,000 policy, has cancer and wants to accelerate 70%. The actuaries consider their case and based on the cancer offer $40,000 for the $70,000 acceleration... So now, when the client dies and the remaining $30K is paid as a DB, she and her beneficiary have received only $70K instead of the $100K she thought she would receive.
I don't understand?
Do the carriers "make an offer"?
What happened to the other 30%?
Or - are you saying that the carrier may only approve a 40% or $40k acceleration and the remaining 60% or $60k will be available for other accelerations or at worse - paid as DB ?
No, I am saying the client accelerates 70k but the company only pays out 40K but the remaining DB is only $30K since $70K was accelerated. The amount actually paid is based upon how the condition affects mortality and it will always be less than the amount accelerated. Some companies have a plan that pays a flat rate upon acceleration but most do not.. Especially, the ones that advertise no cost acceleration riders.
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