Hartford Life, Simsbury, Conn., is betting that consumers will increase their use of accelerated death benefits to pay for chronic care needs.
Why? When the rider launched in 2007, the company had expected 10-15% of permanent policies purchased by Hartford Life policyholders to buy the rider, LifeAccess. The number was closer to 25%, according to Hartford Life’s spokesperson Bob DeMallie.
The reason may be both the need among baby boomers and the need for flexibility, Robert Pokorski, M.D., chief medical strategist in the Hartford’s Woodbury, Minn. individual life division explains in an interview with The Insurance Bellwether. He says that there has been a 50% increase in the sale of this feature, although he acknowledges that it is off of a small base.
The company is intensifying its efforts among wire houses and banks to offer the product, Pokorski adds. He offers data which says that 31% of those over 65 do not need medical care and another third end up in a nursing home. A total of 37% that need treatment initially have it done by family members and often the cause of placing a loved one in a nursing home is due to caregiver fatigue, he adds.
This is where the he says the flexibility of an accelerated benefit rider comes in. The money can be used for any kind of chronic care need and can be paid out up to 2% of the death benefit annually or an IRS cap of $290 a day.
An accelerated benefit rider takes care of the ‘Use It or Lose It’ issue where people who pay into a long-term care policy and don’t use it, are concerned about the loss of premium dollars. It is like auto or home insurance where a policyholder should be glad that they are not using it but human nature proves otherwise, Pokorski explains.