I like the idea of having a chronic illness or critical illness policy that will pay me cash if I get sick and/or could no longer care for myself without assistance.
What I don’t like is having to fork out more money for one more type of insurance.
This is no longer an issue since a handful of term life insurance companies are now offering life insurance with living benefits or chronic & critical illness benefits built in to their term life insurance contracts.
Below is a list of living benefits life insurance companies that offer chronic and critical illness benefits automatically built into their term insurance contract at no additional up front cost:
AIG- QOL Products Only
Independent Order of Foresters
Life of the Southwest
North American Company for Life & Health
What Is Best Life Insurance With Living Benefits
We feel that Columbus Life, North American Company for Life and Health and American National Life currently offer the best life insurance products that are offering these chronic illness and critical illness “living benefits” right now.
Below is a comparison of Columbus Life’s term advantages over some of their competition.In the chart above, ADBR stands for Accelerated Death Benefit Riders, which include terminal illness, chronic illness, and critical illness, also called specified medical. These are also referred to as Living Benefits.
Of the term companies that offer ADBRs or living benefits, Columbus Life is the only one that offers a lump sum payment AND a predictable benefit:
Columbus Life’s predictable benefit will payout as follows:
- For Terminal Illness will pay out the lesser of $250,000 or 60% of the policy’s death benefit.
- For Chronic Illness will pay out the lesser of $250,000 or 40% of the policy’s death benefit.
- For Specified Medical or critical illness will pay out the lesser of $25,000 or 10% of the policy’s death benefit.
Why Is a Predictable Benefit Better?
It comes down to whether or not you want to know exactly what you’ll get for a chronic or critical illness claim up front, or not…
With all of the other term carriers, besides for Columbus Life, the critical or chronic illness benefit you’ll be paid will be determined at the time you make a claim.
Remaining life expectancy is a factor in all of these other insurance companies chronic and critical illness payout calculation.
All insurance companies besides for Columbus Life use a “discounting” method to determine what you’ll be paid on a critical or chronic illness claim.
With the discounted method, you request a specific amount you want for critical or chronic illness. Then after underwriting of your claim, the insurance companies will pay you a discounted amount from what you requested, but they will still reduce your life insurance policy by the amount you originally requested.
In other words, if you submit the claim for $50,000 and they only end up paying you $10,000, your new policy amount will still be reduced by $50,000.
There is also always the possibility that no living benefit could be paid or only a very small benefit could be paid if these other companies deem your life expectancy as being too long.
If Predictable Benefit Is Not Important To You…
North American Company for Life & Health and American National Life (ANICO) also offer great term life products with chronic and critical illness benefit rider, also built in to their policy at no additional cost.
North American and ANICO have great rates, often at lower cost than Columbus Life and the other companies that offer these living benefits.
North American and ANICO do use the “discounted method” mentioned above when determining the amount to be paid out for a chronic and critical illness claim.
We suspect many consumers will get angry later if they make a living benefits claim and they don’t get the payout they’re expecting, but their ultimate insurance amount still decreases by the total amount they originally requested.
North American and ANICO also have a great conversion option and they both currently allow conversion to ANY of their permanent insurance products…and their permanent products also include living benefits!
If you convert to longer coverage, you’ll also have the chronic and critical illness benefits on the converted policy.
What Does Term Life with Living Benefits Cost?
Below is a comparison of American National, North American and Columbus Life’s lowest/best term rates with living benefits.
These are only examples and are all “preferred plus” $250,000- 20 year term monthly rates rounded to nearest $:
Male Age ANICO N. American Columbus Life
40 $19 $20 $24
50 $43 $44 $46
60 $116 $115 $142
65 n/a $219 $226
Female Age ANICO N. American Columbus Life
40 $18 $17 $20
50 $35 $34 $35
60 $86 $82 $88
65 n/a $141 $145
So as you can see from above, the cost to buy a term policy with living benefits is relatively inexpensive.
The cost difference will vary depending on your age, overall health and other underwriting criteria (i.e. family history, driving record, hazardous avocations, etc.).
Is There Perfect Life Insurance with Living Benefits
In lieu of buying a stand alone long term care and/or critical illness insurance policy, which is always an option, we do like Columbus Life’s term with chronic and critical illness benefits primarily because they are the only carrier that offers a predictable benefit.
Columbus Life also allows you to automatically convert to ANY of their permanent life insurance products (that also include chronic/critical benefits) at anytime up to your age 70.
The only negative about Columbus Life’s plan is that they will charge interest if you take money from your policy after a chronic or critical illness.
As of right now, Columbus Life is charging an 8% interest rate, which can also just be deducted from the life insurance amount that your beneficiary would ultimately receive upon your death.
You do not have to actually make an interest payment to Columbus Life each year after a claim, but the ultimate death benefit that your beneficiary receives will be reduced by the amount of money you take after a claim including interest.
Living Benefit Life Insurance Definition- Chronic Illness
For most insurance companies, including Columbus Life, the definition of chronic illness is as follows in most States:
“The insured: 1) has been unable to perform (without substantial assistance from another individual) at least two Activities of Daily Living (ADL’s) for a period of at least 90 days due to loss of functional capacity; or 2) requires substantial supervision to protect himself/herself from threats to health and safety due to severe cognitive impairment.”
The six ADL’s are eating, bathing, continence, dressing, toileting and transferring (i.e. moving in and out of a bed or chair).
The chronic illness triggers are similar to what is required to receive benefits from a long term care insurance policy.
Some insurance companies do require that the chronic illness be a permanent issue to qualify for the benefit.
Columbus Life does NOT require the chronic illness to be a permanent condition to collect the chronic illness benefit.
What Does A Critical Illness Living Benefit Pay For?
Columbus Life also refers to critical illness benefits as specified medical conditions.
Here is Columbus Life’s description of the payout in most States:
“Specified Medical Condition- The insured has been diagnosed with one of the following: Acquired Immune Deficiency Syndrome (AIDS); first coronary angioplasty; first coronary artery bypass; first myocardial infarction; end stage renal failure; major organ transplant; medical condition requiring continuous life support; stroke; or life threatening cancer.”
The only gray area to description above is the “life threatening cancer” notation…what exactly is a life threatening cancer?
Here is Columbus Life’s definition of life threatening cancer in most States:
“A malignant neoplasm (including hematologic malignancy), which is characterized by the uncontrolled growth and spread of malignant cells and the invasion of tissue, and which is not specifically hereafter excluded. The following types of cancer are not considered a life threatening cancer: prostate cancer staged less than T2NOMO or equivalent staging; carcinoma in situ; pre-malignant lesions (such as intraepithelial neoplasia), benign tumors or polyps; any skin cancer other than invasive malignant melanoma in the dermis or deeper, or skin malignancies that have become life threatening cancers. Life threatening cancer must be diagnosed pursuant to a pathological diagnosis or a clinical diagnosis”
Think You’ll Never Need Living Benefits…Think Again
Check out these stats:
- There were over 1.6 million new cancer cases in the United States in 2017
- About 92 Million Americans are living with some sort of cardiovascular disease or the after-affects of a stroke according to the American Heart Association and American Stroke Assoc.
- Many people are unable to work for a long period of time after one of these ailments, and 32 months is the average for one long term disability absence.
- Medical problems were a cause of 50% of foreclosures and 62% of all bankruptcies.
Being able to get cash from a life insurance policy while you’re still living or for your beneficiary at death makes these new term life insurance policies extremely valuable!
Gone are the days where someone must to die for anyone to get money from their term life insurance!
These new living benefits term insurance policies can also prevent you from having to buy two or more separate policies, one for critical and chronic illness or long term care and another for life insurance.
Life Insurance with Chronic Illness Living Benefit for Seniors
Many seniors who have a concern about paying for long term care or home health care, but don’t choose to buy an individual long term care insurance policy, are buying these life insurance policies with chronic illness benefits with the dual intent of providing money to their beneficiaries at death OR to help pay for care while they’re still living.
According to the U.S. Department of Health and Human Services, about 70 percent of individuals over age 65 will require at least some type of long-term care services during their lifetimes. Over 40 percent will need care in a nursing home for some period.
Average annual cost of long term care in a facility is $82,128.
Average annual cost of home health care is $43.536.
Other facts and statistics regarding long-term care point to its growing prevalence:
- More than 6 million elderly Americans need assistance from family or friends if they are to live at home.
- At least two-thirds of all home-care assistance is provided for free by family members and friends.
- By the year 2020, one of six Americans will be 65 or older.
- Of people turning 65, 69 percent will need some long-term care before they die.
- More than half of the U.S. population will require some type of long-term care during their lives (nursing home care, home health care, assisted living, or rehabilitative facility care).
- Of men turning 65, 58 percent will need some long-term care.
- Women are more at risk than men—once they turn 65, 79 percent of women will need some long-term care at some point before death.
- Among those turning 65, 52 percent will need long-term care for at least one year before they die, and 20 percent will need more than five years of care.
- The average nursing home stay is approximately two and a half years.
- After 2021, the population in nursing homes is expected to increase substantially. This is the year the oldest baby boomers will turn 75. As the population ages, research has predicted the nursing home population to grow to three to four million residents.
Key Man Life Insurance with Living Benefits
If you’re an employer that wants to insure your key people, then there’s no better term product then one that can also pay out living benefits.
A chronic or critical illness could prevent your employee from working for some period of time.
If you have one policy that can protect for death or for a loss of your employee due to a chronic or critical illness, isn’t this the ultimate product?
Same thing goes if your using life insurance to fund a buy-sell agreement.
Why buy a policy that will only pay out for death, if you can also get a pay out if your business partner or key employee is no longer able to work due to a chronic or critical illness.
Health Problems and Life Insurance with Living Benefits
If you have health problems, you still may be able to qualify for a policy that offers the living benefits mentioned above with North American, Columbus Life or one of the other companies…
But this is really going to depend on your particular history and the severity of your condition.
Let’s start with the most common health issues that we see, and what kinds of cases can still qualify for Living benefits:
If you were diagnosed with diabetes over the age of about 35 to 40, your diabetes is well controlled with oral medication, and your overall health is pretty good otherwise, then you may be able to qualify for a life insurance for diabetics policy with living benefits.
We have also had really well controlled diabetics diagnosed prior to age 35 qualify for policies with living benefits, but the younger your age of diagnosis and the longer you’ve had diabetes, the tougher it will be for you to qualify for a policy with living benefits.
If you have coronary artery disease diagnosed at about age 45 to 50 or older, with no more than mild heart damage and relatively good health otherwise; or if you have very well controlled A-fib or other more benign type of irregular heartbeats; or a minor heart valve repair above the age of 50 to 60; then you may also be able to qualify for a policy with living benefits.
If you have more extensive coronary artery disease with two or more stents or that required a double, triple, quadruple bypass, or if you have a more significant cardiac history, then you may not be able to qualify for a policy with living benefits.
To qualify for a policy with living benefits if you’re obese and your health is good otherwise, below is a chart that shows the approximate weight you’ll have to weigh less than to qualify for a decent rate with living benefits:
5’ 0” tall- 217 pounds
5’ 1” tall- 224 pounds
5’ 2” tall- 232 pounds
5’ 3” tall- 239 pounds
5’ 4” tall- 247 pounds
5’ 5” tall- 255 pounds
5’ 6” tall- 263 pounds
5’ 7” tall- 271 pounds
5’ 8” tall- 279 pounds
5’ 9” tall- 287 pounds
5’10” tall- 296 pounds
5’11” tall- 304 pounds
6’ 0” tall- 313 pounds
6’ 1” tall- 322 pounds
6’ 2” tall- 331 pounds
6’ 3” tall- 340 pounds
6’ 4” tall- 349 pounds
6’ 5” tall- 358 pounds
6’ 6” tall- 367 pounds
All Living Benefit Companies Underwrite Differently
We’ve spoken to underwriters at Columbus Life and other companies that offer living benefits, and the guidelines that these companies use to determine what rate they’ll offer you or if you can or cannot qualify for a policy with living benefits are not always in black and white.
What I mean is that if you may be a couple pounds over the maximum allowable weights above, but everything else checks out as really good (i.e. your cholesterol, blood pressure, blood sugar, etc), then you may still be able to qualify for a policy with living benefits.
Or if you’ve had 2 stents placed at age 49, for example, and all of your other coronary arteries showed no evidence of blockage and your health is good otherwise, then you still may qualify for a policy with living benefits.
Or if you’re an insulin dependent diabetic, but with optimal control, then you may still be able to qualify for a policy with living benefits.
We really need to shop each case when there is a preexisting health issue with Columbus Life and the other companies that offer living benefits to determine which may be best.
There are term carriers that offer living benefits that can be more liberal for people with preexisting health issues than Columbus Life, so there may still be life insurance with critical and chronic illness riders available to you if you have some more serious health issues or if your weight is higher than shown above.
These companies that offer life insurance with chronic/critical illness living benefits underwrite a little bit differently than the insurance companies that just offer regular life insurance that only pays out for death. The reason is because of the higher likelihood that the living benefits companies may have to pay out claims.
Bottom Line on Life Insurance with living benefits
If a policy with chronic and critical illness living benefits is only slightly more expensive than a policy without, then we’ll always recommend the policy with the better living benefits.
But the choice is yours and whether you want the absolute lowest rate or the lowest rate with the living benefits, we can help you…
Rates, products, and benefits can vary from state to state and they can change, so the above is only general information that will need to be verified based on the state where you live and at the time you ultimately decide to apply.
This is a market that will continue to change and evolve and we expect more and more companies to start offering “living benefits”.
Click on the link below to get an accurate quote or contact us at 1-800-380-3533 or CLICK HERE to email us at if you’d like more information about life insurance with chronic and critical illness living benefits mentioned above.
Since 1992, Gordon E. Conwell, III (G3) has helped thousands of ”higher risk” individuals get the best life insurance rate/value. Being a high risk himself, he knows the struggles you’ll face trying to get affordable life insurance. His unique shopping process and underwriting knowledge will result in the best offers, every time!