By Cyril Tuohy
Nationwide has announced the launch of a terminal illness benefit rider for variable annuity contract holders who are expected to die within a year.
The Enhanced Surrender Value for Terminal Illness (ESVTI) feature is available in new contracts for most variable annuity products issued by the company.
Eric Henderson, Nationwide senior vice president of life insurance and annuities, said the rider adds more flexibility to the company’s stable of variable annuity products.
“Offering our customers the flexibility to use their fund how they wish while they’re living is simply the right thing to do,” Henderson said in a news release.
The rider, available after the first year of the contracts, is available at no additional cost.
An annuity holder who isn’t expected to live much longer must surrender the contract in order to take advantage of the feature, the company said.
Nationwide’s ESVTI rider also works with the company’s Spousal Protection Feature. This feature gives the owner the option of exercising the ESVTI rider if either co-annuitant is declared terminally ill, so that the value of the benefit flows to the surviving spouse, the company said.
Terminal illness riders are widely available for both fixed and variable annuities.
Recently, life insurance and annuity carriers have added riders to life insurance policies and annuity contracts as a way to unlock the value contained in the agreements while the contract holder or policyholder is still alive.
Chronic illness and cancer care riders, for example, have turned up as riders attached to whole and universal life policies, as well as to long-term care policies.
Families with members suffering from terminal illness can find some solace in the fact that they have access to funds contained in the annuity to help pay for medical and end-of-life expenses.
There’s no precise data on the number of Americans with terminal illness, but in 2012 an estimated 1.5 million patients received services from hospice care. This is an increase from 1.2 million in 2008, according to the National Hospice and Palliative Care Organization.
Paying for medical treatment is expensive: Medicare paid $50 billion for health care during the last two months of life, according to a 2009 report aired by CBS News.
Cyril Tuohy is a writer based in Pennsylvania. He has covered the financial services industry for more than 15 years. Cyril may be reached at [email protected].
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