Disability And Long Term Care Riders On Life Insurance Policies

One of the advantages of permanent life insurance is that there are all sorts of riders that you can purchase along with the policy.  Two that could be particularly useful are available through The Hartford:  The LifeAccess rider and the Disability Access rider.  The LifeAccess rider aims to take the place of a long term care insurance policy for people who have life insurance but not a separate long term care policy.  The Disability Access rider provides a safety net for people who don’t have short term disability insurance coverage (the rider does not provide long term disability coverage).

Sales of the LifeAccess rider are up 80% nationally (the rider was first introduced in 2007) in the past year, and that may have something to do with the rising price of long term care policies recently.  The rider can be added to a permanent life insurance policy for a cost ranging from 5% to 15% of the cost of the life insurance policy.  The rider will generally be less expensive than a long term care policy on its own, but the cost of the permanent life insurance will be much more than the cost of a term life insurance policy with a similar face value.  For most people, it probably makes more sense to purchase a term life insurance policy and a separate long term care policy.  But for people who have a genuine need for a permanent life insurance policy, adding a long term care rider could make a lot of sense.  In addition, the LifeAccess rider is more leniently underwritten than stand-along long term care policies, which might make it an attractive option for applicants with less than perfect health.

The Disability Access rider has been available from The Hartford for a little over a year, and costs an additional 6% to 10% of the cost of the life insurance policy.  It has a monthly benefit cap, and a lifetime cap of up to 24 monthly payments.  The monthly benefit cap is calculated when the policy is issued, and cannot exceed $5,000.  The money can be used to protect the insured’s lifestyle/income in the event of a disability, or to pay for a buy/sell agreement or key man insurance policy depending on the insured’s business situation.  As with the LifeAccess rider, this rider only makes sense if the insured truly has a valid need for a permanent life insurance policy and is able to pay the premiums that it entails.  For some people, it will be a good option, although term life insurance and a separate disability insurance policy might be a better choice for a lot of people.

Comments

  1. Peter Klaven says:

    It’s impossible to predict who will become disabled at what time. That’s why having long term disability insurance with good benefits is an absolute must. When I broke my leg on the job I thought I was going to be in the poor house. Then I found my service provider, and it was like a breath of fresh air.

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