Insurance is usually thought of as a necessary evil, paying off only for one’s heirs or misfortune. That makes the general public reluctant even to think about it. The Hartford, however, has turned this on its ear. Its two most recent riders are indicative of a trend, the company says, that it intends to continue and that will make the concept of life insurance more attractive, with benefits to the insured while still living.
On March 17, the company announced a new rider that was the second in this direction: the Longevity Access rider. Longevity Access offers insureds a way to protect themselves from what is becoming a more common event than that for which life insurance was originally designed.
Brian Murphy, executive vice president of life insurance at The Hartford, says the company’s perspective for the past three years has been that life insurance, as it’s existed, has been targeted at the least likely event that can happen to a large group of people: untimely death. People live longer, he says, more often experiencing disability as they age. “And other forms of protection that have existed over the last several decades—Social Security, Medicare, Medicaid—all those are being restricted … so it becomes incumbent on individuals to take care of themselves.”
The Life Access rider—Longevity Access’s precursor, which offers a long-term care component on a life insurance policy—“was very successful,” he says, and both it and Longevity Access “address those two events” of longer life and chronic illness. Longevity Access offers eight years or more of income to covered insureds who live to age 90 or older and meet the rider’s requirements.
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Murphy says when a financial planner helps someone about to retire plot out an income stream from aggregate savings, even if that income stream is tested against rate of return, rate of utilization and inflation, the plan “usually falters because it may have some rainy day money, but it’s usually a fair-weather plan.” He adds that the longevity of today’s population is not only greater than most people think it is, but it also adds to the very real danger that people will run out of money to live on.
The Hartford, says Murphy, when trying to predict longevity, can look at it from “a large numbers standpoint” unavailable to an individual trying to figure out how many years her income must last.