People diagnosed with ALS (Lou Gehrig’s Disease) and other terminal illnesses are overwhelmed with so many life-changing issues, and at the top of that list is how they are going to take care of their family as well as pay their medical bills.
It is significant that the Life Insurance Consumer Disclosure Act (House Bill 193, Senate Bill 136) is now before Georgia legislators. The crux of the matter, as you may know, is transparency. For nearly 100 years, life insurance policies have offered living benefits in addition to the better-known death benefit. The Disclosure Act makes it clear that Georgia-licensed agents are expected to and protected when they ensure consumers know about all of their options.
You see, the majority of all life insurance coverage is abandoned before any death benefit is paid. People in dire financial circumstances, often due to serious illness, are most at risk of lapsing policies. Many of those consumers – and I know far too many of them personally – do not know their policies could actually offer them relief through a dozen or more living benefits, ranging from premium waiver, a loan against a policy, surrendering it for cash surrender value to the receipt of an accelerated death benefit or life settlement, among other options.
Knowing about such options is crucial because, when you are sick and can’t work, money is critical. Life insurance is hard to understand and confusing to people; this legislation would require disclosure of all the “living benefits” available in life insurance, so those who have paid for coverage may understand it, rather than losing the coverage and finding out after the fact that a policy may have offered them substantial benefits.
It is noteworthy that the senate version of the Life Insurance Consumer Disclosure Act was introduced by Sen. Marty Harbin (R-Tyrone) – himself a licensed life insurance agent by profession. Rep. Carl Rogers (R-Gainesville) – also an insurance agent – introduced the aforementioned the House version, HB 193.
The Senate version of the Act will face a special hearing before the Senate Insurance and Labor Committee Friday, March 6, at Noon in Room 125 of the State Capitol. I encourage advocates of seriously ill and senior Georgians to attend this hearing and to otherwise ask the members of the Insurance and Labor Committee to vote “Yes” on the Act.
There will then be other hurdles, like having the House take action on either its version of the bill or on the Senate version and perhaps reconciling any differences in the bills, but Friday’s hearing is crucial and Committee members need to see us that day and hear from us by then.
As Rep. Rogers notes, “consumers – and particularly those who are living with serious illnesses – do not consistently have sufficient information to make a decision about the current living benefits of their life insurance that best suits their individual circumstances.”
Harbin adds that the Act requires life insurance carriers and their agents to notify consumers that there are alternatives to lapsing or surrendering a policy and that policies may have substantial living benefits. Agents would be protected when they rightly fulfill their fiduciary duty to advocate on behalf of their clients.
“In particular, this legislation will help terminally ill people who may need to harvest this asset to pay for health care or quality-of-life solutions,” says Rep. Rogers. Sen. Harbin adds that the Act is good for Georgia because it frees up consumer assets to be reinvested in the state economy. The Act provides them another means to access private funds to address health issues, which lessens the burden on taxpayers and public programs. For these and other reasons, six other states now require some form of these disclosures, meaning the Peach State is ahead of the curve by embracing this legislation.
NAIFA (the National Association of Insurance and Financial Advisors) Georgia, representing 1,043 agents in the state, has endorsed the bills, with NAIFA Georgia President Don Esposito noting, “for many Georgia consumers, life insurance is among their most valuable assets but some may not be totally aware of their policy’s full potential. The disclosure required by this Act will help inform consumers that, under certain clearly defined circumstances, they may qualify for living benefits.”
The bills also have been endorsed by various NAIFA chapters throughout the state, including Atlanta South, Macon, LaGrange, Savannah and Statesboro. Likewise, organizations including Cure for ALS, the ALS Association, Georgia Chapter, and MDA of Greater Atlanta have endorsed the bills.
Now, the Disclosure Act needs your endorsement: Let your legislators – starting with the Senate Insurance and Labor Committee – know that Georgia policy owners deserve to know about all their options, should be able to elect the rightful benefits for which they have been paying and be assured of assistance from their life agent. I believe most Georgia insurance agents want to do the right thing (after all, they are licensed to and want to inform consumers about all options); let’s help them do that and help protect them when they do. Ultimately, our state wins as well, and can be shown as a compassionate leader of such simple-yet-powerful reform.
Knowledge is power and I believe that it is imperative that dying people who are already in a desperate and vulnerable position are empowered with the knowledge of their rights and benefits of what they have been paying for.
Ted Harada is an ALS patient and active advocate.