Pricing a Long-Term Care Rider on Variable Life Insurance

Variable universal life insurance (VUL) is a product in which the policyholder chooses the size of the premium and also the type of fund into which the premium is invested once fees are removed. In fact, it is often sold as an investment vehicle more so than a life insurance policy. An optional rider to this policy is an accelerated benefit feature, in which the policyholder can receive monthly payments should they require long-term care (LTC). In this instance, the payments will be a fixed percentage of the death benefit minus payments already made, to a maximum of half of the death benefit, so that the LTC payments are made for ~2 years. The portion of the death benefit not made as LTC payments will be paid upon death. The cost of this rider will be determined through this project.