A whole life policy includes a Long Term Care rider that allows the insured to access 2% of the $300,000 death benefit per month while receiving qualifying LTC services. The insured has received LTC benefits for 10 months. What has happened to the death benefit?

Question

EstatePass Inc. · Accepted Answer

The death benefit is reduced to $240,000 because $60,000 was accelerated — A Long Term Care rider accelerates a portion of the death benefit as a living benefit to cover qualifying care expenses. The death benefit is reduced dollar-for-dollar by each LTC payment. Calculation: 2% × $300,000 = $6,000/month × 10 months = $60,000 accelerated; $300,000 − $60,000 = $240,000 remaining death benefit. Option A is wrong—acceleration always reduces the remaining benefit. Option B is wrong—the policy is not eliminated unless the full face amount is accelerated. Option C is nonsensical; acceleration does not increase the death benefit. Texas applies its long-term care rules to LTC riders attached to life policies as well as to standalone LTC policies (28 TAC §3.3804(a)).

A whole life policy includes a Long Term Care rider that allows the insured to access 2% of the $300,000 death benefit per month while receiving qualifying LTC services. The insured has received LTC benefits for 10 months. What has happened to the death benefit?

Why this is the answer