The Los Angeles Times is reporting that a new product from the Hartford allows insurance policy holders to draw down on the amount of money paid at death to beneficiaries that functions much like reverse mortgages.
As an example, the Times says, if you are paying premiums on a $500,000 permanent life insurance policy, some or all of that amount could be withdrawn if you become chronically ill. In order to do so, the policyholder must be “chronically ill” for the rest of her or his life, which has to be affirmed annually by a doctor.
Unlike long term care policies, the rider doesn’t require a policy holder to submit receipts to verify expenses.
The LifeAccess rider was first sold by The Hartford in May 2007, but it wasn’t offered in Connecticut until September. So far, it’s been a popular alternative to long-term care insurance, said Robert Pokorski, The Hartford’s chief medical strategist.
Sales of the rider are up 80 percent nationally and 160 percent in Massachusetts in the past 12 months, said The Hartford spokesman Robert DeMallie.
Sales of the LifeAccess rider are likely a direct result of rising premiums in long-term care. In several cases, insurers are raising 2011 premiums for long-term-care coverage by about 40 percent compared with this year’s rates.
New Way To Pay For Elderly Care: ‘Reverse Mortgage’ On Life Insurance