Indexed Universal Life Insurance Success

Profile:
Name: Sarah
Gender: Female
Age: 35
Health: Preferred Plus, Nonsmoker
Type of Insurance: Indexed Universal Life (IUL) Insurance with Chronic Illness Rider
Initial Coverage Amount: $300,000
Monthly Premium: $158
Background:

At 35, Sarah purchased an Indexed Universal Life (IUL) insurance policy worth $300,000. Along with the death benefit protection, Sarah added a Chronic Illness Rider, which allowed her to access part of her benefit if she became seriously ill. She knew this living benefit could provide financial support if she ever faced a major health issue, helping with things like mortgage payments, medical bills, or daily expenses.

The Event:

Ten years later, at age 45, Sarah was in a serious car accident that left her paralyzed from the waist down. She struggled to perform everyday tasks and was diagnosed with a chronic illness.

  • What is a Chronic Illness? A chronic illness is a condition where a person is unable to perform at least two out of six Activities of Daily Living (ADLs), such as bathing, dressing, eating, toileting, transferring, and maintaining continence. In some cases, it can also include severe cognitive impairment requiring substantial supervision. This must last for at least 90 days and be certified by a licensed healthcare practitioner.
  • How the Chronic Illness Rider Helped Sarah: Because of her chronic illness, Sarah was able to use the Chronic Illness Rider on her life insurance policy. She chose to accelerate a portion of her death benefit to receive $72,000 upfront. This cash allowed her to cover medical expenses, pay her mortgage, and handle other financial needs while she adjusted to her new circumstances.
Remaining Coverage After Acceleration:
  • Age 45: After using a portion of her benefit, Sarah’s remaining life insurance coverage was $228,000.
  • Future Years: If Sarah continues to use the rider, her death benefit will be reduced further, but her monthly premiums will also decrease based on the remaining coverage.
Key Takeaways:
  • 1. Chronic Illness Protection: Sarah’s decision to add a Chronic Illness Rider to her IUL policy gave her the financial support she needed when she could no longer perform daily tasks due to her paralysis.
  • 2. Living Benefits: The rider allowed Sarah to access part of her life insurance while she was still alive, helping her manage medical and living expenses.
  • 3. Continued Coverage: Even after using the living benefit, Sarah still had life insurance protection for the future, with lower premiums to match the remaining benefit.

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