The obvious value of life insurance is the death benefit protection it provides, as well as the accumulation potential offered by products such as whole life insurance. But these features are often just the tip of the iceberg. Since everyone has unique needs and goals, consumers no longer have to settle for "one-size-fits-all" insurance. Today, many life insurance plans are customizable through the policy "riders." A rider is an option that can be added onto a policy to provide additional protection and/or benefits.

Riders create flexibility by enabling policyowners to design a combination of base plans and additional options that best suit their needs. Some riders are automatically included with the insurance; others must be requested, but do not have a cost attached; still others can be obtained at an additional premium. Each has its own unique features and purpose.

The Living Benefits Rider
Rider benefits can vary by state, and not all riders are available in every state. Your New York Life agent can answer any questions you have about a particular rider.

The Living Benefits Rider (LBR) can offer peace of mind at a critical time. It entitles the policyowner to an early (accelerated) payout of policy death benefits,¹ if the insured is diagnosed with a terminal illness.² The LBR can help make the insured's remaining time as comfortable and as dignified as possible.

With the escalating costs of medical bills, too many terminally ill patients are faced with financial hardship during the worst possible time. As a person deals with the emotional and physical struggles of terminal illness — as well as the impact on loved ones — the last thing needed is the additional stress of astronomical medical bills.

Often, meeting these bills becomes yet another struggle to endure. The sad irony is that , while the patient may have substantial collateral in life insurance policies, those funds are technically "off limits." The LBR breaks down the "off limits" fence. By invoking it, the policyowner can access from 25% to 100% of eligible policy proceeds, up to $250,000. This payment — which is made to the policyowner rather than the beneficiary³ — reduces what would be paid upon the death of the insured. However, if only a portion of the available benefit is accessed, rather than the entire amount, the policy will still remain in force with a death benefit. Premiums, values, and the face amount will be appropriately reduced.

Policyowners in this situation can also access funds through a policy loan or a policy surrender. In most cases, however, the LBR provides more funds than a policy loan or surrender. This is because policy loans or surrenders are usually based on cash value, while the amount available from the Living Benefits Rider is generally based on the policy's face value, paid-up additions, and (if applicable) an amount payable under a rider that provides a level amount of insurance.

Available at No Cost
At the policyowner's request, this rider can be added to new or existing policies,⁴ (if issued after 1985), at no additional charge. The policyowner merely has to elect living benefits coverage, and can choose to do so anytime. The policyowner can even elect living benefits coverage at the same time that he/she furnishes New York Life with medical proof that a terminal illness exists.

The financial consequences of a terminal illness can be catastrophic, but the LBR may offer a strong measure of relief, and provide comfort during a difficult time. For more information about the LBR, contact a local New York Life agent now.

NOTE: Proceeds may be taxable, and the IRS has not yet clarified how adding this rider to your policy could affect the income tax treatment of the policy. For this reason, it's important to consult with a personal tax advisor prior to making the election to receive benefits.

¹ The proceeds available are adjusted to reflect the time value of money; therefore, the amount paid is slightly discounted.
² Medical proof that the insured has twelve months or fewer to live (six in Michigan) is required.
³ Benefit is subject to the approval of any policy assignees or irrevocable beneficiaries.
⁴ Not available in every state, and not available with all New York Life products. Please consult a local New York Life agent for complete details.

At no charge to you, a New York Life agent — professionally trained and experienced — can help you analyze your needs and recommend appropriate solutions through insurance and financial products and concepts. Click here to request a no obligation review with a New York Life agent.

This material is being provided for informational purposes only. Neither New York Life nor its agents provide legal, tax or accounting advice. Please contact your own advisors for legal, tax and accounting advice.

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