In my previous article, “Return of Premium”, I explained how the concept of not forfeiting one’s premiums was the insurance industry’s response to a common objection, “What happens if we pay our premiums for 30 years and never file a claim?” Immediate benefits are a concept originated to address a similar objection, “You mean it might be 30 years before we file a claim? What happens until then?”
Although introduced in the last decade, Immediate Benefits have really come into their own within the last few years, and it’s this author’s expectation that they will see increased growth as both a built-in, “must-have” benefit, and increased utilization as policyholder awareness spreads.
A FREE LUNCH?
The first known “Immediate Benefit” was one carrier’s Brain Fitness program piloted to a subset of policyholders in 2007. The vendor had created a precursor of what are today highly popular interactive memory-stimulating computer programs (you can find examples available on the retail market for X-Box, Playstation, Wii, etc.). Only in this case, Posit Science Corporation’s mental exercise tool was hailed as one of the “medical breakthroughs of the year” by CNBC, whose published studies demonstrated clinically significant gains on standard cognitive batteries versus participants in control groups.
Aware that dementia and Alzheimer’s disease are the most costly causes of LTCi claims, the carrier made the Brain Fitness program the centerpiece of its overall wellness initiative. Tests showed that participants gained an equivalent of 10 or more years of improved cognitive function (i.e. ability to remember, and faster processing speed) among populations over age 60.
The advantage of such wellness benefits are obvious to both parties: policyholders may potentially stave off declines in both physical and mental health—even if incrementally—which helps to preserve benefits, while the carrier offering the wellness program hopes to recoup more than its cost in lower-than-expected claims.
Carriers then entered the “Immediate Benefit” realm by offering a smorgasbord of benefits—usually made possible by an agreement with a 3rd party vendor. As we move forward in time, we find that such benefits extend first to just the policyholder herself, and then more frequently to her entire family—even her un-insured relatives—not only making the benefit more attractive, but making the very purchase of the underlying policy more compelling in order to obtain the Immediate Benefits for her uninsurable family members.
A typical suite of benefits might include:
- Discounts on LTC services (which thus extend how long your benefits will last)
- Quality reports on service providers
- Reference and placement services for those who need help locating providers, and
- Care advocacy and ombudsman assistance for the ongoing beneficiary
WHERE WILL YOU BE TOMORROW?
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