Most people (73%) who need chronic care are cared for at home by a family member, not in an assisted living faculty or a nursing home.8 And this percentage might be even higher if people could stay at home. Sadly, many people enter a nursing home not because they are severely disabled, but because they no longer have a caregiver at home.

Longevity
Most people are more worried about outliving their money than dying,9 and for good reason. The number of Americans age 65 and older in 2030 is projected to be twice as large as in 2000, growing from 35 million to 72 million,10 and representing nearly 20 percent of the population.11 America's population of centenarians--already the largest in the world--has roughly doubled in the past 20 years, to around 72,000, and is projected to at least double again by 2020.12 Some demographers predict that if the pace of increase in life expectancy continues through the 21st century, most babies born since 2000 will live to the age of 100.13

Here's a real world example of the need to address longevity risk. Suppose a financial advisor has a client couple age 65, both of whom were approved for life insurance at standard rates. Insurers project a life expectancy for the husband and wife, respectively, of 87 and 89 years. This means that approximately 38 of 100 men (almost 4 in 10) and 50 of 100 women (half) will reach age 90.14 More amazing still is that 14 of the 100 men (one in seven) and 25 of the 100 women (one in four) will live to at least age 95.

Widowhood
In the example above, there is a two-year difference in the life expectancy of a 65-year-old man and woman (87 versus 89). This would lead most people to conclude that widowhood is usually relatively short. But this is not true. Widowhood often lasts for many years or even decades.

First, the good news: People are living longer and living longer together. According to the 2000 Individual Annuity Mortality Basic Table, half of 65-year-old couples will reach age 80 together.

The bad news is that after one spouse dies, the survivor is often left alone for a long time. For 65-year-old couples, almost three in four (71%) will be widowed for five years or more, and nearly half (46%) will be widowed for ten years or more. If the surviving spouse is the wife, as is often the case, she may have less savings (especially if the couple's retirement nest egg was depleted by the illness of the partner who died), lower Social Security benefits and smaller pensions. To make matters worse, she no longer has a spouse to care for her when she becomes ill at a later age.

While we may not be able to prevent these non-financial events, there are financial options that can change how these events affect clients and their families. So, while clients may not be able to save enough money to cover the cost of all of life's unforeseen events, there are new insurance products that provide extra income from a policy's death benefit when it is needed most.

Dr. Robert Pokorski is chief medical strategist in The Hartford's Individual Life Insurance business. The Hartford offers life insurance policies, as well as its LifeAccess Accelerated Benefit Rider that can provide income to someone who becomes chronically ill and its LongevityAccess Rider that can provide income to someone who lives to the age of 90 and beyond. Insureds must meet all rider requirements to receive benefits. Benefits from more than one rider cannot be received at the same time and receiving benefits under either rider will reduce, or may eliminate, the death benefit to beneficiaries or available under the other rider.

 

1    Richard W. Johnson. When the nest egg cracks. Urban Institute, 2006.
2    Richard W. Johnson, Janice S. Park. Can unemployed older workers find work? Urban Institute, 2006.
3    Billings MB, Rappaport AM. Living to 100 - Challenges and opportunities for employers. October 25, 2010.
4    Sun W, et al. Does staying healthy reduce your lifetime health care costs? Center for Retirement Research. May 2010, Number 10-8.
5      Johnson RW, Mommaerts C. Will health care costs bankrupt aging boomers? The Urban Institute. February 2010.
6    Kemper P, et al. Inquiry. Winter 2005/2006;42:335-50
7    2011 Alzheimer's Disease Facts and Figures. Alzheimer's Association.
8    National Care Planning Council, 2011.
9    Anne R. Carey and Sam Ward, USA Today, February 16, 2011. Source: Allianz survey of adults ages 44-75.
10    Federal Interagency Forum on Aging-Related Statistics. Older Americans 2010: Key Indicators of Well-Being. Washington, DC: U.S. Government Printing Office. July 2010.
11    U.S. Department of Health and Human Services: National Clearinghouse for Long-Term Care Information, 2010.
12    Number of 100-year-olds is booming in US. Associated Press (AP), April 27, 2011.
13    Christensen K, Doblhammer G, Rau R, et al. Ageing populations: The challenges ahead. Lancet 2009;374:1196-208/
14    The 2008 Valuation Basic Table, Select and Ultimate Nonsmoker, which is based on U.S. insurance com-pany individually underwritten mortality experience.

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