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  • The ADB-CIA is not approved for sale in CA.

Accelerated Death Benefit for Chronic Illness Agreement

Our Accelerated Death Benefit for Chronic Illness Agreement (ADB-CIA) offers benefits for clients who need life insurance and desire assistance with expenses while chronically ill.1 

As long as the insured meets the benefit eligibility requirements, the contract will pay up to the maximum monthly chronic illness benefit payment. Clients can use chronic illness benefit payments for whatever they want, including but not limited to:   

  • Care from family/home health care 
  • Home remodeling/personal loans 
  • Groceries/prescriptions 
  • Transportation/food delivery 
  • Housekeeping/lawn care 
  • Assisted living/skilled nursing care 

Benefits

Financial independence

Help clients avoid financially burdening family members or depending on government services for care. 

Asset protection

Help clients prevent care expenses from draining retirement assets and other savings. 

Flexibility

Clients may use the benefit payments however they choose — including paying for care from family, groceries, assisted living, housekeeping and much more.

Benefits paid no matter what2

Benefits will either be paid to help with expenses if the insured becomes chronically ill, to their beneficiaries as a death benefit, or both. 

Control of benefits

Clients can choose the amount of benefits they want to receive up to the monthly maximum or a lesser amount — allowing benefits to potentially last longer. 

Tax advantages

The maximum chronic illness benefit paid up to the IRS per diem rate.3 This means the benefits paid to the client may receive favorable income tax treatment.4

Details

Issue ages

  • All states except FL; 20-80 years old (based on nearest birthday)
  • Florida: 25-65 years old (based on nearest birthday)

Maximum ADB-CIA face amount

Amount selected at time of issue. 10%-100% of the life insurance base face amount (not to exceed $5 million) 

Maximum monthly ADB-CIA benefit5

The lesser of 2% or 4% of the ADB-CIA face amount or IRS per diem limit 

Elimination period

  • All states except NY: 90 calendar days 
  • New York: None 

Benefit payments

  • All states except NY: Not paid during elimination period, not paid retroactively 
  • New York: Paid retroactively to the beginning of the insured’s certification as being chronically ill 

Benefit eligibility

  • All states except NY: (1) Certified as a chronically ill individual (2) Elimination period satisfied 
  • New York: (1) Certified as a chronically ill individual and requires continuous care for the remainder of the insured’s life in his or her home or eligible facility; (2) Receiving services which are specified in the plan of care and expected to remain so for the remainder of his or her life; (3) Proof of loss includes expenses incurred and a plan of care 

Underwriting issue classes

Preferred, Standard Plus, Standard 

Impact to base life insurance policy

While monthly benefits are being paid:

  • Life insurance death benefit and surrender value are reduced 
  • A portion of the benefit may be applied to any outstanding loans, if applicable 
  • No new loans or partial surrenders (not applicable in NY) 
  • The accumulation value is moved to the Fixed Account 

Monthly benefit termination

Chronic illness benefits end upon: 

  • Depletion of chronic illness death benefit amount 
  • Insured’s death 
  • Policy surrender 
  • Failure to meet eligibility requirements 
  • Request to cancel this agreement 

How it works

  1. Determine the life insurance face amount and add the ADB-CIA to the policy. 
  2. Policyowner chooses the chronic illness benefit amount: 
    • 10%-100% of the life insurance face amount to provide chronic illness benefits (not to exceed $5 million) 
    • Maximum monthly chronic illness benefit amount benefit (2% or 4%) of the dedicated face amount 
  3. Policyowner pays the life insurance premiums. 
    • ADB-CIA charges are deducted from the accumulation value (along with other charges) 
  4. Qualify to receive chronic illness benefits:6
    • Policyowner is eligible for chronic illness benefits upon the insured’s being certified as a chronically ill individual and satisfying the elimination period 
    • ADB-CIA charges are waived7
    • Policy will not lapse while on claim 
  5. Monthly chronic illness benefits paid: 
    • Policyowner determines payment up to the maximum monthly ADB-CIA benefit selected. The remainder stays in the policy. 
    • Life insurance death benefit is reduced, dollar-for-dollar, based on the chronic illness benefits paid. This percentage is calculated each payment. 
    • If a loan exists, a portion of the monthly chronic illness benefit payment will be used to pay down the balance of the loan 
  6. Monthly chronic illness benefits end upon:
    • Depletion of the chronic illness death benefit amount 
    • Insured’s death 
    • Policy surrender 
    • Failure to meet eligibility requirements 
    • Request to cancel 

If the insured goes off claim while ADB-CIA or death benefits remain:

  • ADB-CIA charges will resume 
  • If the policy has little to no cash value and unable to cover charges, or the death benefit guarantee has lapsed, the owner may need to pay additional premiums in order to keep the policy in force 
  • At death, the remaining death benefit will be paid to the beneficiaries

Products

Products with the Accelerated Death Benefit for Chronic Illness Agreement:

Next steps

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1. If owner/insured are different, benefits will be paid to the owner upon the insured being certified as a chronically ill individual.

Chronically Ill Individual:

All states except NY: Insured has been certified by a licensed health care practitioner within the preceding 12-month period as: (1) being unable to perform, without substantial assistance, at least two Activities of Daily Living due to loss of functional capacity (activities that include eating, bathing, toileting, continence, dressing and transferring) for period of at least 90 days3 or (2) requiring substantial supervision to protect the insured from threats to health and safety due to severe cognitive impairment. (Confinement due to medical condition is required to be permanent in CT.)

New York:  Insured has been certified by a licensed health care practitioner as: (1) being unable to perform, without substantial assistance from another person, at least two Activities of Daily Living due to a loss of functional capacity for at least 90 days; or (2) requiring substantial supervision to protect the person from threats to health and safety due to a severe cognitive impairment.

2. As long as premiums are paid and the policy remains in force. Guarantees are based on the claims-paying ability of the issuing insurance company. 

3. The IRS daily per diem rate takes into consideration benefits received by an individual from all long-term care and chronic illness contracts. 

4. Due to uncertainty in the tax law, chronic illness benefits paid from a life insurance contract may be taxable. Please ensure that your clients consult a tax advisor regarding chronic illness care benefit payments from a life insurance contract. 

5. The accumulation value, surrender value, loan value and death benefit will be reduced by a chronic illness benefit payment under this agreement.

6. Eligibility for ADB-CIA benefits varies by state. 

7. If the policy accumulation value goes to zero while chronic illness benefit payments are being made, all policy and agreement charges that would otherwise be assessed against the accumulation value will be waived. 

Please keep in mind that the primary reason to purchase a life insurance product is the death benefit. 

Guarantees are based on the claims-paying ability of the issuing insurance company.

Life insurance products contain fees, such as mortality and expense charges (which may increase over time), and may contain restrictions such as surrender charges. Variable life insurance products contain fees, such as mortality and expense charges, and may contain restrictions, such as surrender periods. There may also be underlying fund charges and expenses, and additional charges for riders that customize a policy to fit individual needs. Charges and expenses may increase over time. The variable investment options are subject to market risk, including loss of principal.

The Accelerated Death Benefit for Chronic Illness Agreement may not cover all of the costs associated with chronic illness. The Agreement is generally not subject to health insurance requirements and does not provide long-term care insurance subject to state long-term care insurance law. This Agreement is not a state-approved Partnership for Long Term Care Program Agreement, and is not a Medicare supplement policy. Receipt of Chronic Illness Benefit payments under this agreement may adversely affect eligibility for Medicaid or other government benefits or entitlements.

Due to uncertainty in the tax law, chronic illness benefits paid from a life insurance contract may be taxable. Please ensure that your clients consult a tax advisor regarding chronic illness care benefit payments from a life insurance contract.

The Accelerated Death Benefit for Chronic Illness Agreement is a life insurance policy agreement that provides an option  to  accelerate the death benefit in the event that the insured becomes chronically ill.

The accumulation value, surrender value, loan value, and death benefit will be reduced by a chronic illness benefit payment under this agreement.

CA Residents: This is a life insurance benefit that also gives you the option to accelerate some or all of the death benefit in the event that you meet the criteria for a qualifying event described in the policy. This policy or certificate does not provide long-term care insurance subject to California long-term care insurance law. This policy or certificate is not a California Partnership for Long-Term Care program policy. This policy or certificate is not a Medicare supplement policy.

Additional agreements may be available. Agreements may be subject to additional costs and restrictions. Agreements may not be available in all states or may exist under a different name in various states and may not be available in combination with other agreements.

Policy loans and withdrawals may create an adverse tax result in the event of lapse or policy surrender and will reduce both the surrender value and death benefit.  Withdrawals may be subject to taxation within the first fifteen years of the contract. Clients should consult their tax advisor when considering taking a policy loan or withdrawal.

This information is a general discussion of the relevant federal tax laws provided to promote ideas that may benefit a taxpayer. It is not intended for, nor can it be used by any taxpayer for the purpose of avoiding federal tax penalties. Taxpayers should seek the advice of their own advisors regarding any tax and legal issues specific to their situation.

Insurance products issued by Minnesota Life Insurance Company

Policy form numbers:  ICC16-20057, 16-20057 and any state variations; 15-20026; ICC19-20204, 19-20204 and any state variations; ICC18-20150, 18-20150 and any state variations; ICC18-20149, 18-20149 and any state variations; 18-20155

The information presented above is solely intended for use by financial professionals. Such information is not intended for public consumption or dissemination.

For financial professional use only. Not for use with the public. This material may not be reproduced in any way where it would be accessible to the general public.

DOFU 11-2022

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