Many aging baby boomers are protecting themselves against long-term care (LTC) costs by using life-LTC hybrids rather than stand-alone long-term care insurance (LTCI) policies.
Consumers can use different kinds of policy features to help meet LTC planning needs.
Last week, I talked about the LTC riders classified as 7702B riders. This week, I want to talk about 101(g) only options.
Of course, all LTC and chronic illness riders on life insurance pay benefits as a tax-free acceleration of death benefit via 101(g).
But there are important differences, and those differences determine which types of claims qualify for benefits, how benefits are paid out and how riders are charged.
The LTC riders classified as 7702B offer more comprehensive coverage. To qualify for a claim, the client needs to meet the basic requirements related to chronic illness. That means a physician must certify that the insured, for a period of at least 90 days, is unable to perform at least two activities of daily living (ADLs) or suffers from severe cognitive impairment.
There are other riders — chronic illness riders — that are classified only as 101(g) riders.
These 101(g) only riders all use the indemnity model of benefit payment. However, the term “long-term care” may not be used in marketing these products.
Thus, you will see these riders generally referred to as “accelerated death benefit for chronic illness” riders.