For advisors who provide insurance and risk management to individuals and families, a growing area of interest is end-of-life planning. This topic has garnered public attention due to changes in medical technology and health care management. State legislatures have given individuals and their families far more control over managing these decisions. To provide holistic risk management to clients, insurance advisors should know about end-of-life issues such as medical directives, medical powers of attorney, POLST (Provider Orders for Life-Sustaining Treatment) orders, and physician-assisted suicide.
This article was inspired after I had a discussion with a well-known estate planner concerning which information is, and is not, important for a life insurance agent to know. I advocated end-of-life planning as a significant new area for agents to learn, and my colleague disagreed. His concern was twofold. First, if a client is involved in end-of-life planning, isn’t it already too late to be thinking about life insurance? Second, end-of-life planning can be a messy legal subject that involves conflict and litigation, often without any chance of a positive outcome. How does this relate to insurance and risk management?
So, permit me to explain my reasoning. I’ll begin by describing what I mean by “end-of-life planning.” Individuals have become hyper aware that the last few days or weeks of their lives may be both painful and expensive. They are also aware that machines and medical procedures may prolong life without a corresponding quality of life. For many, the fear is that their final days may involve unnecessary suffering while also draining personal resources. So, to the extent of individuals having a say in how they spend their final days, they are interested.
We know that medical technology has expanded one’s options regarding end-of-life decisions. Defibrillators, feeding tubes, respirators, targeted therapy drugs – all these can prolong life. And in recent years, our legal system has expanded the individual’s say in what is to happen – or not happen – when approaching the end. Living wills are common, do not resuscitate (DNR) wishes are a standard question in hospital procedures, and some states are even experimenting with physician-assisted suicide procedures. End-of-life planning is the process of addressing these choices.
Enter The Insurance Planning Professional
So why is this an area of planning in which an insurance advisor should be conversant? It is for the same reason life insurance is important. Both concern a person’s mortality and the consequences of death. It’s just that end-of-life planning was traditionally outside the control of the individual. Medical science was limited in how much it could prolong life, and individuals were legally limited in dictating the terms of their own dying process. Now that both of these areas have changed, an insurance advisor can help the client not only with issues related to what happens after death, but also with what happens during death.
End-of-life planning offers several positive outcomes for clients and their families. First and foremost, it offers peace of mind. By making decisions in advance, client concerns are alleviated regarding many of the “who, what, where, and when” questions that often come with dying.
Clients at least have the possibility of a say in “who” makes medical decisions, “what” those decisions should be, “where” they choose to die, and “when” death is to occur. Another potential positive is that end-of-life planning is financially valuable to the family. Consider this example. Your client believes that extraordinary medical procedures are both cruel and wasteful, and he doesn’t want physicians to expend any of these efforts on him should the occasion arise. Your client is also concerned that his financial legacy could be depleted by unwanted end-of-life medical procedures, depriving his wife and family of his hard-earned wealth. As will be discussed below, by executing an advanced directive and medical power of attorney, he is more likely to avoid being subjected to these intrusive procedures should he face such a situation. He can’t substitute the judgment of a physician, but he has a say about the extent of life savings procedures to be used. Further, in many jurisdictions, if a surgery is imminent, the client can make his wishes known to the medical staff through mandated hospital procedures, commonly referred to as a POLST order. These steps can limit unwanted procedures on your client and mitigate the excessive depletion of family wealth in his last few days.
Planning for the end of one’s life can come in many forms. It may involve deciding to move to an assisted-living facility, setting things straight with an estranged relative, completing items on a bucket list, or initiating a planned giving program. However, the more specific use of the term “end-of-life planning” deals with decisions that involve events temporally close to the date of one’s death. It deals with the specifics of how one is to die. Because medical technology has created the opportunity and risk of a prolonged life, end-of-life planning has grown in popularity and taken on increased importance. Below are some of the trending areas of interest in this growing field.
Power of Attorney
Specific to end-of-life decisions, a medical power of attorney (POA) allows an individual to predesignate a proxy to make medical decisions. Often the proxy faces decisions such as whether to use life-savings efforts (CPR, feeding tubes, etc.) or to instead avoid these efforts (DNR, no ventilators, etc.). State laws now permit these powers to spring to life when the client loses legal capacity and then stay in force (i.e., be “durable”) as long as the individual remains incapacitated. It is essential that the POA comply with the requirements of HIPAA; otherwise, the individual’s appointee (called an “attorney in fact”) will not have access to the individual’s medical information.
Living Will/Advanced Directive
For many, it’s not enough to just execute a power of attorney. Rather, the person wants his or her attorney in fact, the hospital, and other stakeholders to know about her end-of-life wishes. State laws vary in terms of what is allowed, how the documents are to be drafted, and what they are called, but in general, such documents are referred to as a living will, an advanced directive, or a medical directive. However it is designed and filed, this is the document in which the individual can state she doesn’t wish to have extraordinary measures taken to prolong her life or, conversely, that she wants all possible medical efforts made to keep her alive. The document indicates preferences more than it dictates medical procedures, and it is treated as a guide for caregivers, not as a medical roadmap. The medical directive has recently grown in popularity, commensurate with the growth in life-sustaining procedures. In fact, as part of the check-in process for many hospitals and clinics, the patient is asked if there is an advanced directive, and if so, to provide a copy.
POLST (physician orders for life-sustaining treatment) is an approach to improving end-of-life care. It both encourages doctors to speak with patients about end-of-life wishes and creates specific medical orders to be honored by health care workers during a medical crisis. This in-hospital procedure involves the caregiver and patient discussing such decisions as a DNR and then recording these decisions on a brightly colored sheet that is included with the patient’s medical record. More than half of the states in the U.S. have passed legislation laying out a specific process for such orders.
A small but increasing number of states have passed laws permitting assisted suicide in certain situations. These laws typically require the patient’s knowing involvement in the process, advanced counseling with a physician, and self-administration of any life-ending drugs. While still limited in scope, these controversial laws have significantly expanded patients’ end-of-life options in those states where it is permitted.
Sometimes actions to be taken after death influence decisions to be made before death. For example, say an individual is adamant about being an organ donor. If he becomes terminal and unable to communicate, his attorney in fact may be faced with deciding when is the best time to take him off life support for purposes of tissue viability. Or say the patient’s religious beliefs require an immediate burial. The attorney in fact may choose to delay withdrawing life support until loved ones are able to arrive. These kinds of post-mortem desires should factor into the client’s end-of-life planning. The medical POA and living will are both ways to help facilitate appropriate decision making during a stressful time.
End-of-life decision making is one of the fastest growing areas of estate planning. A significant reason for this growth is that clients are increasingly aware of these issues, and they are want to handle these decisions in advance. But what about the discussion I had with the estate planner who said end-of-life planning doesn’t need to be part of an insurance advisor’s knowledge base? The gist of his argument is that end-of-life planning 1) is primarily a process that occurs after the client has become uninsurable, and 2) typically involves messy legal issues that are more the province of attorneys than of insurance planners. I submit three counter arguments.
1. Planning versus deciding.
Traditionally, end-of-life planning, to the extent it was even possible, wasn’t so much planning as simply deciding. Loved ones told the doctor, or sometimes the doctor told the loved ones, “It’s time to let her move on; it’s time to let her go.” Nowadays, these decisions can be more formally processed through DNRs, POLST orders, and POAs. But these actions, along with decisions about physician-assisted suicide, remain near-death decisions. The opportunity for planning tools such as life insurance has long passed.
This, however, ignores the planning opportunities that do exist for end-of-life planning. Durable and springing powers of attorney allow a client to decree, while still healthy, who is to make medical decisions should the client be unable to do so. Advanced directives and living wills give the client the ability to make stakeholders aware of desires. And these planning contingencies should be topics of discussion when the client is considering the purchase of a life insurance product. This is all part of the holistic planning process for determining, while still healthy and cognizant, what is to happen when the client loses functionality and ultimately dies. This kind of personal risk management addresses what happens before, during, and after death.
The relevant paperwork that concerns end-of-life decisions is not always through attorney-generated documents. Some forms are signed at the hospital; others are “pro forma” fill-in-the-blank documents provided by the relevant state. In some cases, even the state’s bar association provides sample documents. This is not to discourage attorney review and oversight. Rather, I’m simply stating that insurance planners are well advised to learn the rules of their relevant state and help their clients whenever possible to address end-of-life issues before it is too late to do so.
3. The appropriate advisor.
What can be more unpleasant than talking about end-of-life issues? This conjures up visions of being attached to tubes and beeping machines, surrounded by grieving relatives in an antiseptic, white-walled hospital. Advice-givers can understandably hope to avoid these discussions. Yet, life insurance advisors routinely must discuss issues of death with clients. The product the agent offers may be euphemistically called life insurance, but it provides a death benefit. A successful life insurance advisor is skilled in addressing the vagaries of life and the consequences of death. So, who better to add end-of-life discussions into the financial advice mix? Insurance advisors should understand this topic because they are best-suited to discuss it with their clients.
To provide quality service to the client, an insurance advisor must be conversant with a number of legal and financial topics. Insurance involves far more than premiums and death benefits. The burgeoning area of end-of-life planning is one more body of knowledge for the professional insurance advisor to understand and apply.
This post was originally published in the Journal of Financial Service Professionals 72, No.6 (2018): 31-34, copyright 2018, Society of Financial Service Professionals.
Steve Parrish, JD, RICP®, CLU®, ChFC®, AEP®, is an adjunct professor and Director of the New York Life Center for Retirement Income professor at The American College of Financial Services and interim director of the Compliance and Risk Management program at Drake University Law School.
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