Accelerated Death Benefits:

Blessing Or Curse?

On a cold and windy day in early December, Elaine (not her real name) lay huddled in her tiny basement apartment in Chicago trying to keep warm. A 48-year-old Filipina immigrant, Elaine had been diagnosed in August with metastatic liver cancer, a disease with a survival rate of only 9% after a year, 3% after 2 years and 0% after 5 years. With little left in life to look forward to, Elaine on this day was anxiously awaiting a call from her cousin, an agent with a highly respected career insurance company, saying her claim under her “Living Benefits Rider” had been approved. She was hoping to use the money to fulfill her only 2 remaining dreams: a trip to Rome to visit the Vatican, and a last trip home to the Philippines while she was still well enough to travel.

The call from the agent finally came, with the news that the claim was being denied. The attending oncologist, it seems, refused to “certify” that the client had less than 12 months to live. She instead wrote in her letter that this patient “may” live as long as 22 months with some experimental therapies being tried.

This certification is required by the carrier as part of the “evidence” of terminal illness needed for a claim, according to the contractual language in the rider. An appeal to the president of the company to waive this requirement and pay the claim based on the dismal statistics of the diagnosis in the APS was to no avail. On Christmas Eve morning, final word came down from the home office. No apology, no regrets. “Claim denied, you may re-submit in 8 months.”

Until this happened, I must admit I had paid little attention to the accelerated death benefit riders that most carriers now offer at no additional cost. I became curious if all carriers had the same language, so I studied the language used by about 10 reputable carriers.

What I found amazed me. Most, but not all, include the requirement of certification by a licensed physician. However, the definitions of terminal illness vary wildly, from 6 months to 2 years to simply “terminal.” First lesson: Agents should examine their carriers language carefully when discussing this rider with clients and prospects.

However, it is this “certification” requirement I find most troublesome.

The fundamental problem here is that physicians are physicians. They are not underwriters or actuaries. When a client is underwritten for life insurance, do carriers require as part of the underwriting process that the doctor make a statement as to his or her opinion of the clients life expectancy? Everyone in our business would surely view this as absurd.

It is the underwriters job, not the doctors, to evaluate the medical evidence in an APS, determine the clients life expectancy and assign an appropriate rating. Interestingly, this particular carriers illustration software is the only one I know where the clients life expectancy actually is calculated and displayed when the clients age and rating are entered. Clearly, then, this carrier recognizes this responsibility as theirs and not the doctors when it comes to life underwriting.

Why, then, does it suddenly become the responsibility of the doctor in the case of an accelerated death benefit claim?

When physicians are asked to “certify” a clients life expectancy, they are being given an impossible task. While an actuary is trained to apply the law of large numbers to come up with a highly dependable statistic for a group with a given medical condition, a doctor is trained to do the best thing for one specific patient at a time. In todays enlightened times, most physicians now recognize that intangibles like hope, prayer, attitude and life purpose can make a huge difference in how long someone with a terminal illness lives. My uncle died earlier last year of the same disease that Elaine had. However, he was 79, had led a good life and had no interest in prolonging the inevitable with alternative therapies. He lasted only 4 months from the diagnosis.

This experience enlightened me to how severely this rider provision can upset the delicate balance that has to be maintained in the doctor-patient relationship. Patients certainly can read the language in the rider, so if they get money, they know their physician must have “certified” they will not live more than 12 months. Yet the physician probably is telling the patient something far more optimistic in order to maintain hope and the belief that their therapy will make a difference. The patient in effect gets the message that the doctor is giving lip service to the hope message but is really betting on the other horse. This is, in my opinion, a totally unacceptable position for a physician.

The agent, who in Elaines case was also a family member, was also emotionally torn apart. How could she visit her cousin offering “hope” predicated on a shorter life? And should she hope for short life, so the cousin can realize her dreams, or a long life?

This whole story has now, as of late January, deteriorated into a dark sea of emotions and family strife, not to mention the loss of credibility of this agent and carrier in an ethnic market legendary for its “grapevine” network. If the carrier wasnt there for Elaine in her hour of need, why should any other Filipino buy life or long term care insurance from it? All this because a contractual provision places physicians in an impossible no-win position for which they have neither the training nor the duty.

I now strongly feel that carriers should remove this language from their accelerated death benefit riders, as some have already done, or at least allow more flexibility in weighing all the “evidence” and paying these claims when the diagnosis is clearly terminal.

In this case, I found a dozen Web sites, as well as the Mayo Clinic book many people have in their homes, that tell you the prognosis for this disease is 6 to 9 months. There is no cure, only so-called palliative therapies to make the patient more comfortable. What on earth can a physicians certification add to this? Our industry needs to let doctors be doctors, not underwriters or actuaries.

Glen W. Bobo, CLU, ChFC, is director of education and training with Pacific Southwest Financial, a brokerage general agency in Woodland Hills, Calif. He can be reached via e-mail at gbobo@psfin.com.


Reproduced from National Underwriter Life & Health/Financial Services Edition, March 25, 2004. Copyright 2004 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.