88. Why the "Critical Illness Rider" is Critical to a Successful Financial Plan

 

Most VUL cases I see being bought by policyholders are either intended to provide money for  (1) education expenses of a child (2) retirement funding (3) saving up for a life goal

These are all good and are positioned to benefit from the long term upward bias of the investment component, usually invested in an equity fund or a variation thereof, a lot of academic studies shows that over the long term, an equity fund is the optimum vehicle for capital appreciation, so all a policyholder needs to do is the maintain the policy and wait for the maturity period? right?

One aspect that some advisors may have overlooked is the "long term nature" of the plan, we are looking at 10, 15 or even 20 years into the future, while we cannot guarantee investment returns, what is "guaranteed" is that the policyholder will get old, and as they get older, the chances of them getting sick becomes higher

Imagine 15 years into a 20-year retirement funding plan, the policyholder suddenly contracted a critical illness that requires substantial expenses, it is possible that surrendering the policy for fund value may happen to help defray medical expenses, will there be anything left to fund his retirement?

Attaching a critical illness rider to the plan may make sense in this case, if the same circumstances happen to the policyholder on the 15th year, he can claim on the protection benefits of the CI rider keeping his retirement fund value intact

All the best my friends!

#acgadvice