CIBR Flashcards
What is the Critical Illness Benefit Rider?
This rider provides a benefit equal to 10% or 25% of the total face amount of the policy, with a maximum benefit of $250,000.
Upon initial diagnosis of a covered critical illness event, the insured receives the entire critical illness benefit pool in a lump sum. The CIBR creates a separate pool and does not accelerate the death benefit.
How many covered illnesses are there, and what are they?
Cancer
Heart Attack
Stroke
Coronary Artery Bypass Grafting
Kidney Failure
Major Organ Failure
Paralysis
Who must make the initial diagnosis of a covered critical illness?
Must be made by physician or specialist expert in the medical field diagnosing the specific critical illness.
When does the diagnosis have to be made?
30 days after the rider’s effective date
Does the insured have to supply receipts in order to receive the benefit?
No. Receipts are not needed, and the funds can be used for any expense.
True or False: Electing the Critical Illness Benefit Rider removes the potential need for the LTC Rider.
False. A proposed insured may need the CIBR along with the LTC Rider and/or the Accelerated Benefit Rider to adequately cover their risk.
How is the qualifying event of the CIBR different from the qualifying event for the LTC Rider and the ABR?
CIBR: initial diagnosis of a covered illness (does not need to be terminal)
LTC: unable to perform 2 of 6 ADL’s
ABR: terminal diagnosis with one year or less life expectancy
What is the waiting period for the CIBR and how does it compare to the waiting periods for LTC and ABR?
The waiting period is the amount of time that must pass before a critical illness diagnosis is made, and for the CIBR that’s 30 days. The clock for the waiting period starts running on the rider’s effective date. Once the rider is effective, and 30 days have passed, then an initial diagnosis can be made.
An elimination period is different. It doesn’t begin running until the qualifying event occurs. Then the insured must wait out this time, generally around 100 days for LTC, before receiving benefits.
What is the tax treatment of CIBR charges, and how does that compare to charges for the LTC Rider and ABR?
Monthly rider charges for the CIBR are deducted from the policy value, which constitutes a distribution, and thus may have Federal income tax implications.
On the other hand, charges for the LTC Rider are considered a non-taxable distribution and reduce the policy’s cost basis.
There is no charge for the ABR, until it’s exercised.
What is the tax treatment of CIBR benefits, and how does that compare to the tax treatment of benefits for LTC Rider and ABR?
Benefits from both the CIBR and LTC Rider are free from Federal income tax. However, benefits from the ABR may be taxable.
How are CIBR benefits paid, and how does that compare to the LTC Rider and the ABR?
The CIBR and the ABR are both non-taxable cash payments which are paid in a lump sum.
LTC benefits are paid on a reimbursement basis up to the monthly maximum benefit amount.
Does a claim under the CIBR impact other riders?
No. A claim for the CIBR does not impact LTC or the ABR, and vice versa.
Can CIBR benefits be coordinated with benefits provided by other coverage?
No. The benefits from the CIBR cannot be coordinated with benefits provided by other coverage. The same goes for the ABR.
But, benefits received under the LTC rider will be coordinated with other John Hancock LTC policies and Medicare.
Are CIBR benefits an acceleration of the death benefit?
No. Benefits from the CIBR are paid from a separate pool, and are not an acceleration of the death benefit. Payment of benefits does not affect the base policy face amount.
For LTC and the ABR, the opposite is true. Both of these riders accelerate the death benefit.
Is consent of a third-party required to receive benefits under the CIBR?
No. The CIBR and LTC Rider do not require the consent of a third party. However, for the ABR, the consent of the irrevocable beneficiary and/or assignee (if any) is required.
