Taking care when you can’t take care of yourself

As we plan for retirement, we generally focus on saving enough money to live comfortably. And we should. But it’s also important to consider the potential impact that a debilitating illness might have on the funds we’ve worked years to accumulate.

Many of us have watched an aging family member or loved one gradually become less able to care for themself as they grow older. Developing or progressing chronic conditions often require them to depend on others for help with day-to-day activities.

Common chronic conditions

6 in 10 Adults in the US have at least one chronic disease.¹

• Alzheimer’s disease
• Heart disease
• Cancer
• Chronic lung disease
• Stroke
• Chronic kidney disease
• Diabetes

High cost of care

Often, family members or close friends are the first choice to provide the needed care — either due to financial constraints, or because that’s the preference of the sick person or caregiver.

Traditional methods of paying for care

Medicare only covers rehabilitative care for 100 days. Even then, the sick person’s share of that coverage could exceed $12,000. And Medicaid is only available to those who have hardly any savings and low incomes. Long-term care insurance can help pay expenses for the chronically ill, but many people are seeking alternatives. Premiums may be more than some people are willing to pay, and significant rate increases are becoming common.

Another approach – Chronic illness riders

An alternative approach to help pay chronic illness expenses is to add a chronic illness rider to a life insurance policy for a nominal charge.

A chronic illness rider lets the policy owner use the death benefit — before the insured dies — if the insured becomes chronically ill. A person is considered chronically ill if they can’t perform two key activities of daily living without help, or if they are cognitively impaired by a condition like Alzheimer’s disease or dementia, and are at risk to their own safety without help.

The amount of benefits paid for qualifying illnesses is linked to the life insurance policy death benefit. Chronic illness benefits can be used at the policy owner’s discretion, even for non-medical personal expenses. Benefits can even be used to pay a family member who provides care, and who may have quit their job or reduced their work hours to do so. No record keeping for actual expenses incurred is required.

Potential uses for chronic illness rider benefits*:

• Medical expenses

• Care in a facility

• Home health care

• Adult day care

• Pay a family member

• Personal use

*These are only examples of how the benefit payments can be used. The benefits can be used for any purpose.

A chronic illness rider lets you add valuable benefits to a cash-value life insurance policy. In one policy, you can have:

• Income tax-free death benefit protection for survivors.
• Access to policy values for supplemental income or other cash needs.
• Optional use of death benefit for chronic illness expenses.

There are differences between chronic illness riders and long-term care insurance. Chronic illness riders have an expectation that the qualifying condition be permanent, and long-term care coverage does not. Chronic illness riders do not restrict how benefits are used. Long-term care coverage will not generally reimburse a family member who provides care and may require proof of expenses incurred for all claims.

As you plan your financial future, you might want to consider the potential benefits of adding a chronic illness rider to your indexed life insurance policy.