With a national election crowding headlines, transparency may not seem the norm, but thankfully there is a mounting trend toward disclosure when it comes to life insurance policies. You see, state legislators, non-profits and other advocates are working anew to ensure consumers understand the value they have in this important asset – life insurance, and, especially, the fact that they have “living benefits” within their existing life policies, especially if they face a catastrophic illness and need an assist.
By their very nature, the language of life insurance policies are tough to wade through and understand. Thus, you may not realize that the majority of all life insurance coverage is abandoned by the policy holder with no benefit ever paid out, and the benefit you may be missing out on is not just a “death benefit,” payable upon your demise.
Too frequently, people faced with the financial stress of serious illness are inclined to let a policy lapse or to settle for a scant cash surrender value. Those consumers deserve to know they have other options that may include a loan against a policy, receiving an accelerated death benefit, or transacting a life settlement, as well as other options.
I can tell you first hand the joy and relief someone experiences when they discover that an almost-forgotten life policy might provide living benefits like a nursing home benefit, a critical illness benefit, long-term-care benefits, waiver of premium, disability income, an assignment clause, a guaranteed lifetime income benefit or other Godsends.
Indeed, a variety of living benefits are built into most life policies and, no, in most states the life insurance company is not required to remind you about those benefits. So, unless you have an informed and active life agent, or happen to be an insurance policy wonk yourself, or know someone else who has leveraged these benefits, you may never know you have them or that you are entitled to them. Don’t consumers have a right to know about and benefit from the benefits they have and for which they pay?
Afoot in some states, including my home state of Georgia, Life Insurance Consumer Disclosure Model Acts and similar measures would require life insurance carriers and their agents to notify consumers that there are alternatives to lapsing or surrendering a life insurance policy. Again, these hidden benefits are not only helpful to those living with a serious or terminal illness, but also seniors. Some of the available living benefits for which policy holders qualify, may pay for medical care or quality of life issues.
This kind of transparency and disclosure is not just good for consumers: Helping clients leverage living benefits gives life agents another way to serve their clients and can help the economy by providing citizens another way to access private funds to address health issues, which may lessen the burden on taxpayers and public programs.
Spread the word. Ask your insurance agent what beneficial “secrets” your policy may hold. Ask state legislators if they are part of the movement toward greater transparency and disclosure of life insurance benefits. Better yet, tell your friends and family. Who knows when and how this bit of wisdom may benefit someone you know.
By: M. Bryan Freeman, President & Managing Member, Habersham Funding, LLC
(LISA VOTING MEMBER)
A life insurance and settlement industry veteran, M. Bryan Freeman established Habersham Funding LLC in 2001, building on his more than 25 years’ experience in the secondary market for life insurance. He is a long-time leader within the industry. He served twelve years on the board of the Life Insurance Settlement Association and is its former four-term President. Bryan began his career as an insurance agent, giving him a comprehensive understanding of life insurance, and conducted his first life settlement in 1989. For more than a decade he ran a highly successful life settlement brokerage, giving him more experience in life settlements than virtually anyone involved in the industry today. Bryan and his team have been actively involved in the development of responsible regulation and legislation of the life settlement industry. His activism helped federal employees and veterans gain the right to transact settlements and cleared the way for tax-free treatment for some settlements. Bryan has testified before state legislative committees, the National Association of Insurance Commissioners and the National Conference of Insurance Legislators on numerous occasions about the structure of the industry. He has served as an expert witness on life insurance and life settlements in both federal and state courts. His expertise in the life settlement industry is recognized internationally. In 2006, Bryan was commended for his long service and pioneering efforts in his advocacy for life settlements by both the Georgia Senate and Georgia House.