November 23, 2020

Volume X, Number 328


November 20, 2020

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Life Insurance That Benefits the Living

For decades, life insurance has been viewed as just providing benefits to those named as the beneficiary. As we enter the new decade, insurers are changing this narrative. Insurers are looking to offer insureds a range of value-added products and services with the life insurance products as well as benefit riders that permit insureds to receive part of the death benefit or take loans from their policies allowing them to use the proceeds to improve their life.

Insurers are developing programs under which insureds are given access to health care apps, devices, such as smartwatches or smart speakers, and telemedicine services, which allow beneficiaries to manage chronic medical conditions, track their medication, be more active, and maintain healthy lifestyles. However, while these products and services can be valuable to both insurers and insureds, life insurers have to consider several legal issues when structuring these programs.

  • Will the value-added product or service run afoul of state anti-rebating prohibitions?

  • Do your partners have appropriate safeguards and policies to protect the insureds' information?

To the extent that access to health providers is made available, these programs may involve the provision of health care services. Thus, a life insurer must consider whether the value-added services are viewed as a form of health insurance under state law. States vary in their definitions of health insurance, but a policy that provides medical benefits in exchange for a premium could be considered health insurance. Life insurance companies would then need to comply with the requirements pertaining to health insurers. Those additional requirements would add numerous regulatory challenges and burdens for life insurers.

However, to avoid classification as a health insurer, life insurance companies can structure health services programs under statutory protections afforded to concierge medicine practices. Concierge medicine practices, which allow patients to directly contract with health care practitioners for the provision of health care services in exchange for an annual or periodic fee, are specifically exempt from the definition of health insurance in numerous states.

©2011-2020 Carlton Fields, P.A. National Law Review, Volume X, Number 38



About this Author

Ann Young Black Carlton Fields Business Transactions Financial Services Regulatory Government Law & Consulting Life, Annuity, and Retirement Litigation Life, Annuity, and Retirement Solutions Securities and Derivative Litigation Securities Transactions and Compliance

Ann Young Black counsels financial services clients on a broad range of insurance, securities, and business issues. She regularly advises clients developing new and innovative life and annuity products and on the insurance and securities issues impacting those products. Ann also advises clients on the laws and regulations regarding the sale, distribution, issuance, administration and operation of, and benefit payment practices related to, these products. Clients also seek Ann's guidance on InsurTech initiatives, including the use of big data, artificial intelligence and machine learning,...

Megan Dhillon Healthcare Attorney

In her practice, Megan Dhillon regularly advises healthcare providers, including hospitals, health systems, long term care facilities, ambulatory surgery centers, physician practices, and licensed healthcare practitioners.

She counsels these providers in corporate, transactional, regulatory, and operational matters. She regularly advises providers on issues pertaining to professional and facility licensure; Medicare/Medicaid enrollment; the laws and regulations governing payment from Medicare, Medicaid, TRICARE, and commercial payers; and compliance with the Medicare Conditions of...