Survivorship Benefit Access Rider
What is a Survivorship Benefit Access Rider?
The Survivorship Benefit Access Rider is an optional add-on available with some life insurance policies, typically whole life and universal life. It allows you, as the policyholder, to access a portion of the death benefit while you’re still alive if you’re facing a terminal illness or a chronic illness. This means that if you’re diagnosed with a condition that significantly impacts your life, you won’t have to worry about your family’s financial situation; you can draw funds from your life insurance to help cover medical expenses, in-home care, or even necessary home modifications. This rider effects survivorship policies where both parents are on one policy.
How Does It Work?
The rider generally works by allowing a surviving parent to access a percentage, often around 50%, of the death benefit you have in your policy, if you are diagnosed with a terminal illness or chronic illness. This amount can vary depending on the specific insurance provider and the policy you choose. For example, if you have a life insurance policy with a death benefit of $500,000, you could potentially access $250,000 if you qualify for the rider.
To access these funds, you’ll usually need to provide documentation of your condition, such as medical records or a doctor’s note affirming your diagnosis. Once approved, the insurer will disburse the funds, either as a lump sum or in installments, depending on your needs and the terms of your policy. It’s essential to read the fine print, as there may be specific criteria you have to meet, such as waiting periods or caps on the benefit amount.
What Can It Help With?
The financial burden that comes with severe health issues can be overwhelming. That’s where the Survivorship Benefit Access Rider can be useful. Here’s how it can help:
1. Medical Bills: Major illnesses can lead to astronomical hospital bills. You can use the funds to help cover those costs, ensuring that you can focus on recovery without the stress of financial strain.
2. In-Home Care: Depending on your condition, you might need assistance at home. The rider can provide funds for in-home healthcare providers, allowing you to maintain your independence and receive the care you need.
3. Home Modifications: If your illness requires a change in your living situation, you might need to adapt your home. This could include installing ramps, widening doorways, or making your bathroom safer, all of which can be funded through the rider.
4. Substituting Lost Income: In the unfortunate event that your illness prevents you from working, the funds can help replace lost wages. This financial cushion allows you to focus on your health and family without the added burden of everyday expenses.
5. Estate Planning: If you pass away after accessing benefits through the rider, the death benefit will be reduced by the amount you accessed. Nonetheless, it can assist in transferring wealth to your heirs, making sure they’re taken care of financially.
How Much Does It Usually Offer?
As mentioned, the typical amount available through the Survivorship Benefit Access Rider is about 50% of your death benefit. However, each provider has different stipulations, so it’s wise to review and compare options before committing. The actual cash you can access may also depend on your age at the time of diagnosis and the type of illness. Also, to qualify, both members of the survivorship policy must be diagnosed with a terminal or chronic illness, or only one member needs to be diagnosed if the other member has already passed away.
