Clarica Broadens The `Living Benefits Scope Of UL
With its new ProsperityPlus UL policy, Clarica Life Insurance Company, Fargo, N.D., is broadening the living benefits scope of universal life insurance.
In so doing, it is seeking to establish its UL as an “alternative to long-term care insurance,” says Kim OBrien, executive director of marketing and product management for Clarica.
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How? By allowing acceleration of up to 100% of the UL death benefit for four care-related events. In most states, it accelerates in four semi-annual payments for convalescent care, home care, or terminal illness, and two semi-annual payments for hospice care.
It has some “piece of mind” extras, too:
1) A “return of premium guarantee” lets owners get their money back, for any reason–for the lifetime of single-premium policies, and during year 11 of flex-premium contracts. (The guarantee can be exercised if the owner has made no accelerations, loans, withdrawals, or death benefit increases.)
2) If the insured dies before receiving all death benefits, the remaining benefits pass on to heirs. But if death occurs after all death benefit has been paid out, the UL still pays a death benefita $10,000 “residual death benefit.”
3) During acceleration, the policy guarantees the policy will not lapse.
The blend of life insurance with care-related acceleration is what makes this product an alternative to LTC insurance, according to the company.
A product brochure terms it “life insurance that gives while you live.”
The policy does contain certain LTC-like qualities. For instance, some of its terminology echoes that found in traditional LTC policies. Examples include “convalescent care,” “care facility,” “home care,” and “medical necessity.”
Also, although the insurer performs regular life underwriting on the applicant (related to the net amount at risk), it also underwrites for the convalescent benefit exposure (on an “accept or reject” basis.).
However, this is still UL insurance, with ULs unique features and flexibilities, OBrien stresses.
“It builds cash value, allows policy loans and withdrawals (as well as acceleration), permits flex premiums, etc. It also pays death benefits, not indemnity claims.”
That distinction is critical, she says. Owners of this policy can get quick and easy access to emergency money, she says, without putting the owners income or estate in jeopardy. “And if the owner doesnt use it all, the policy passes the rest to the heir, tax free.”