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It is a golden rule that you always understand your product before you sell it. Would you sell it to your mother? Life Insurance with ABR’s? You bet I would. The key point to make in this continuation of ABR discussions is to understand when the time is right to consider accelerating a rider. As we know already, Accelerated Benefit Riders were and are designed to be available for assistance when the time is right. So, what is that time? Well that is a good question and the answer will depend on the individual and their situation.
Let me try to answer this another way, if a policy holder files a claim and his or her life expectancy is long, a smaller and in some cases zero payment could be available. If their life expectancy is short due to their qualifying condition, a much larger payment could be available. Simply having a qualifying condition does not always mean you need to accelerate immediately or at all. Let me give you a couple of examples here from individuals I actually know and associate their stories to ABR’s. A 53-year-old male with a $100,000 of 10-year term which has been in effect for one year has what is considered a very mild heart attack. As an avid Crossfit athlete, he was found to have a 90% occlusion in one of his arteries. His condition was resolved with a coronary stint and improved with proper diet management and continuation of his exercise regimen. Negligible damage to his heart was done and his cardiologist indicated he has at minimum 30 years to live. A heart attack is a qualifying condition. Is this a good time to accelerate? No, because his life expectancy (30 years) or mortality has not changed. The present value of the future premiums is deducted from the present value of the death benefit. Take into account PV of nine years of 10-year Term premiums and 21 years of ART premiums being deducted from the PV of $100,000; this would result in an unpayable claim.
A female age 45 with $500,000 IUL diagnosed with ALS (Lou Gehrig’s Disease) given a life expectancy of two years. She had very minor symptoms at time of diagnosis. Was it time to accelerate? You bet it would be a good idea to, at minimum, do a partial acceleration now. Use that partial and enjoy some time with her family while she is still functional. Further accelerate for expenses or other reasons when needed. Here again, life expectancy is very short resulting in a larger payment. She actually beat the odds and lived 3.5 years, but my point here is acceleration was appropriate and put to good use when really needed.
Accelerated Benefit Riders from American National are a wonderful tool to provide peace of mind for future events should they occur. The important part is understanding how they are calculated and when is the best time to utilize them. As you have seen, simply having an event does not always mean immediate acceleration is needed. However, sometimes it does and that is the backbone of what these riders are for. Your protection when you really need it.