Making Life Insurance More Accessible

How riders respond to, and help satisfy, changing customer needs

by Steven Johnson

Mr. Johnson is vice president for product development for Colonial Life & Accident Insurance Company. Connect with him through e-mail: or visit 

Life insurance ownership across the United States is at a 50-year low1. Thousands of companies cut jobs and benefits during the Great Recession. And America’s workers, facing higher costs and lower wages in many cases, have tightened their purse-strings.

That’s left only 70 percent of U.S. households with life insurance coverage, according to a September 2013 study by LIMRA. And 58 million of those households report they don’t have enough.2

At the same time, the need for insurance to help protect families has never been greater. Nearly 75 percent of Americans live at least part of their lives from paycheck to paycheck, according to a 2013 CareerBuilder survey3. If a leading bread-winner were to suddenly die, nearly one-third of Americans say they would struggle to pay bills and buy food within a month, according to a 2014 LIMRA study.4
That’s where you can play a valuable role, explaining the high benefits and low cost of life insurance to consumers and business owners.

“Life insurance is an important benefit to have because it helps provide a financial security blanket for your family in the untimely event of death,” says Shannon Sheppard, a Colonial Life agent based in Memphis, Tenn.

“Loss of life isn’t an easy topic to discuss. Burial expenses and funeral arrangements can be costly, an added burden for a family in their time of grieving and bereavement. Life insurance helps protect your clients’ employees from the expensive costs associated with the loss of life,” Sheppard says.

As valuable as life insurance is, though, carriers continue to look for even better ways to meet consumers’ constantly changing needs. Some carriers are enhancing their cash-value life insurance plans by adding benefits through riders. These optional insurance riders can include a spouse term policy, a children’s term policy, accidental death benefit, waiver-of-monthly deductions, restoration of benefits and long-term care benefits.

Long-term care insurance riders

The most-popular trend today is the addition of a long-term care benefit rider to a whole life or universal life policy. As with other life insurance policies, the plan helps provide benefits for a beneficiary should the insured die. But it also protects the insured during his or her lifetime by offering a “living benefit” should long-term care become a necessity.

As valuable as life insurance is, though, carriers continue to look for even better ways to meet consumers’ constantly changing needs

Such a rider allows all or part of the death benefit to be advanced for long-term care expenses, including a long-term care facility, assisted-living facility, home-health care agency and adult day care. And these expenses are becoming more prevalent, as Americans are living longer and the cost of long-term care remains staggering.

Some quick figures:

  • The average cost of nursing home care is about $75,000 annually – and is expected to rise.5
  • At least 70 percent of those 65 and older will need long-term care services at some point in their lives.6
  • While nearly two-thirds of those surveyed in 2013 said most people need long-term care insurance, only 48 percent of respondents said they need long-term care insurance and only 13 percent said they own long-term care insurance.7It’s not just employers and consumers who are finding long-term care riders beneficial. Bringing this kind of coverage to your clients also helps you because it’s:
  • an affordable way to help clients with potential long-term care expenses
  • competitively priced
  • simple to explain
  • flexible to adapt to customers’ changing needs
  • another avenue to open new doors or refurbish current plans

Protecting the future

There are numerous benefits to adding a long-term care rider to a permanent cash-value life insurance policy. Generally, people consider long-term care later in life, when they’re searching for a sense of security that the benefits will be there when needed.

Such a combination is especially appealing to baby boomers, who are looking for a way to round out their financial plans for retirement. One of the greatest risks to their financial plans is the possibility of a long-term care need because that directly impacts the security of their retirement income and overall portfolio. The guarantees that can accompany a permanent life insurance policy help provide peace of mind to consumers, knowing this important financial protection is tied to a guaranteed plan.

Working with a carrier that offers long-term care riders as an option on life insurance policies gives you the flexibility to meet each of your clients’ unique needs and can help you be more competitive in the benefits industry.
1. “Ownership of Individual Life Insurance Falls to 50-Year Low, LIMRA Reports,” LIMRA, August 2010
2. “The Facts of Life and Annuities,” LIMRA, September 2013.
3. CareerBuilder, Sept. 25, 2013
4. LIMRA, April 9, 2014
5., June 24, 2014
6. 2014 Medicare & You; National Medicare Handbook
7. “Barometer Study,” LIMRA, 2013