By Cyril Tuohy
Lincoln Financial Group is issuing an accelerated benefits rider to protect the assets of those experiencing chronic or terminal illness. The rider is now available for WealthPreserve survivorship indexed universal life policyholders.
Survivorship policies insure two people in the same policy. The rider gives policyholders access to the death benefit when either both of the insured, or the surviving insured, “develops a qualifying permanent chronic or terminal illness,” the company said.
There are no restrictions on what the funds can be used for, no additional premiums are required, and the policy is guaranteed not to lapse as long as no further withdrawals or loans are taken against the policy, the company said.
Surveys indicate that one of the biggest financial burdens on the minds of consumers is how to pay for a chronic or terminal illness. In response, many insurance companies have added critical-illness riders to the policies so that policyholders can extract benefits from their policies while still alive.
Michael Parker, vice president of life product management with Lincoln Financial Group, said in a news release that advisors are best served when they have a “broad set of options to meet the diverse needs of their clients.”
Survivorship policies offer income tax-free death benefits at the end of the second insured’s life, and they help policyholders transfer more inheritance to beneficiaries, contribute toward estate taxes or to continue a business.
A survivorship life policy is bought primarily as a wealth transfer protection tool and is likely to see more interest in the market over the next 20 years as the World War II generation transfers its wealth to baby boomers; and as boomers, in turn, transfer their wealth to Generation X.
Lincoln Financial also announced changes to its LifeElements level term products, which offer a death benefit for 10, 15, 20 or 30 years.
The tweaks allow LifeElements policyholders the option to decrease the death benefit in exchange for a lower premium. Policyholders can reduce the death benefit only once a year beginning in the fourth year that the policy is in force, Lincoln said.
The enhancements to the term products are available immediately.
Reducing the death benefit in exchange for lower premiums gives insured persons more flexibility with their household budgets.
Surveys indicate that consumers want more flexibility with their life insurance policies, and reducing premiums in exchange for lower death benefits is the latest example of the industry's response.
Cyril Tuohy is a writer based in Pennsylvania. He has covered the financial services industry for more than 15 years. Cyril may be reached at [email protected].
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