Spokane Journal of Business

Insurance rider can help fulfill bucket list

Some policies allow access to benefits before death

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Remember that funny movie, “The Bucket List,” with Jack Nicholson and Morgan Freeman?

Great movie, right? If you haven’t seen it, well … put it on your movie “bucket list.”

Did you know that some life insurance policies offer what's called a terminal illness rider that potentially can help people achieve items on their bucket lists? The powerful feature allows the insured to access a portion of the death benefit, tax free, while still alive if a physician gives written notice that the patient has 12 to 24 months, or less, to live. The length of time for which the benefit is applicable varies from state to state.

Let’s say you went in for a check-up and were given the bad news that you had some incurable disease, your life expectancy was less than 24 months, and your doctor told you if there was anything really important you wanted to see or do while you still can, now is the time.

Sad as it is, wouldn’t it be nice if you had a $1 million life insurance policy and the company was able to write you a tax-free check instantly for $500,000?

You could drop your job like a hot potato without any notice, pack your suitcase, and health permitting, get going to see the places you’ve always wanted to see or do the things you’ve always talked about doing but never were able to do or afford.

Maybe you want to go skiing in the Swiss Alps with perfect views of the Matterhorn or the Eiger and have fondue on the deck, watching the gondolas go by. Maybe you want to stay in one of those over-the-water bungalows with the thatched roofs in Tahiti and dive into perfectly turquoise water. Maybe you want to have a huge party and invite all your relatives and friends and pay for the airfare for those less fortunate. Maybe you want to use this money to have your spouse or family to simply quit their job so they can spend every possible minute with you while they still can.

Everyone’s bucket list is different. The point is that life insurance isn't only about providing benefits after you die.

Again, using this rider is optional. After all, the biggest reason people buy life insurance is to give money to their loved ones after they're gone. If that's your goal entirely, don’t exercise the rider. But if you do want some extra cash so you can spend more time with people close to you or to fill your bucket list, it’s nice to know it’s there.

Every policy is different, but most riders offer up to 50 percent of the death benefit up to a cap or ceiling, like $500,000, whichever is less. Any remaining money in the policy goes to your beneficiaries.

There is no cost to add the rider at the time of writing the policy, but the insurance company might charge a small fee at the time you actually exercise it.

Besides filling your bucket list, you may wish to do other things with this money. For example, I know of someone who exercised his rider and took a check for $500,000, leaving the remaining $500,000 in his policy. He and his wife used this money so they could both quit their jobs on the spot. They hired a nanny and a tutor for their children and used this money to cover all the expenses such as the mortgage, utilities, car payments, and groceries. They also used some of the benefit to cover all their travel expenses while flying back and forth on multiple trips to Texas, where they could get some experimental treatment for his rare form of cancer that was not covered under his normal medical insurance.

Ironically, the treatment worked, and he is alive and cured today. He thinks the world of the life insurance industry and sings its praises. He feels he's alive today and is financially intact because of his life insurance policy and the fact he was able to access the death benefit at a time when he really needed it.

Maybe you’ll want to use your terminal illness rider simply to buy you the time you need to get all your affairs in order. Your loved ones really appreciate it when you don’t leave them a huge complicated mess after your demise. It may also give you some peace of mind, closure, and satisfaction just knowing all your affairs are in order and that your loved ones are taken care of.

Again, policies and details vary, so visit with a life insurance professional who will be your advocate and help you to find the right policy with the best features, value, and language.

Todd Radwick, president of Radwick Financial Group LLC, of Winthrop, Wash., is an insurance and financial adviser and a 23-year industry veteran. He can be reached at 509-996-3425, radwickfinancial.com, and todd@radwickfinancial.com


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