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Big Changes in Store for Chronic Illness Benefits




Stoyan Petev
Senior VP of
Advanced Designs

As you are already aware, in order to claim tax-qualified status, LTC or Chronic Illness benefits fall under 2 general groups – Section 7702B or 101(g). While both versions require 2 of 6 ADLs for qualification, Section 101(g) also throws another wrinkle – the permanency requirements. In short, the condition has to be permanent in order to qualify for benefits with annual recertification. This permanency requirement for chronic illness benefits would not pay benefits for certain conditions while the true LTC rider would.

But recent trends in the life insurance industry have started to turn the tables on the permanency requirement for chronic illness benefits. On October 16th, Prudential joined AIG and Protective to drop that language from the rider. Prudential’s Benefit Access Rider (BAR) is a paid-for rider that can be added at policy issue and allows acceleration of the death benefit long as the client is expected to be chronically ill for at least 90 days. BAR still pays indemnity style benefits and has zero day elimination period.

Stay tuned for further such enhancement in the coming year, but don’t let that stop you from quoting the existing riders to address client concerns of how to pay for long term care. The flexibility of such riders in the planning process is still tremendous.

Stoyan Petev | Senior Vp of Advanced Designs   636.695.2805   spetev@FIRSTHEARTLAND.COM

Read more articles from the November Newsletter

 

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