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Life Health > Life Insurance

Pushing The Product Envelope Goes On

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Where insurance designs are concerned, certain insurance product developers are continuing to push the envelope, despite the sluggish economy. Here are few recent examples from various lines of insurance:

IFS Financial Services Inc., has debuted a single premium deferred annuity that offers consumers several choices in guarantee interest periods.

Called MultiMax Annuity, the product offers fixed interest guarantee period options of three, five, seven, or 10 years. By contrast, many other FAs offer only one guarantee interest rate period.

The policy also includes an enhanced earnings benefit. More commonly seen in variable annuities, this feature pays an extra amount, over the base policy death benefit, to beneficiaries. Depending on age of the owner, the extra amount can be up to 40% of contract earnings, subject to a maximum benefit of 100% of the net premium payment.

Distribution is targeted for financial institutions. The issuing company is Western-Southern Life Assurance Company, the Cincinnati, Ohio parent of IFS.

New York Life Insurance Company has unveiled a long term care policy that offers an inflation rider option pegged to the Urban Consumer Price Index.

Called the “benefit increase option rider,” the feature is designed to ensure that LTC policy benefits keep pace with fluctuations in the costs of foods and services, based on the CPI-U, says New York Life. The provision “locks” the premium for future benefit increase offers at the clients original age.

The patent-pending feature is part of LTCSelect Premier, the companys newest LTC policy.

Inflation features in many other LTC policies are “fixed,” meaning they require that policy benefits be increased by a fixed percentage every year, says New York Life. The new CPI-U option can be a more accurate measure of the costs of care that policyholders may need to bear in the future, the company contends.

The LTCSelect Premier policy also includes care coordination, informal caregiver training, facility care, worldwide coverage, waiver of premium, restoration of benefits, waiting period payback, alternate plan of care, and bed-hold reservation features. It covers home and community care, and also nursing home and assisted living facility care.

The Guardian Insurance & Annuity Company, New York, has launched a deferred variable annuity with a “variable payments to age 100″ annuitization option.

This option guarantees the annuitant will receive an income stream until his or her 100th birthday.

In addition, it allows owners to take partial withdrawals or make full surrenders against the value of future payments, during the annuitization period. (One partial payment is allowed each quarter without charge; additional withdrawals can be made at a cost not to exceed the lesser of $25 or 2% of amount withdrawn. Surrender charges may apply to certain withdrawals, and partial withdrawals will lower the amount of future income payments and the value of remaining payments.)

Available in Guardians new VA, the Guardian Investor Income Access, the feature “gives customers flexibility and asset control,” maintains Bruce Long, president of Guardian Investor Services LLC, the VAs distributor. And owners can have full or partial liquidity during the payout phase, in case their needs change, he says.

The new VA pays trail commissions to the financial advisors if the client elects the new variable annuitization option. The policys declining surrender charges run four years, on premium payments made during the policys first three years.

Americas Life Insurance Corporation, Lincoln, Neb., has added No-Load Universal Life to its low-load series of policies. Because it pays no commissions and has no-surrender charges, Americas says, the policy can provide immediate liquidity and high first-year cash value

The target market is people with supplemental retirement income and life insurance protection needs who, due to market volatility, are seeking the safety of fixed returns, the insurer says.

Other features the insurer believes will appeal to this market are the policys tax-deferral, guaranteed return, tax-free death benefits, and premium flexibility. And, for more conservative clients seeking the strict guarantees of whole life, the policy can be structured to offer a guaranteed death benefit, Americas says.

Hartford Financial Services Group, Simsbury, Conn., says it will no longer take mortality and expense charges out of four of its variable universal life policies after the 20th policy year.

Depending on the contract and premium amount paid, the M&E charges for policy years 21 and up range from 25 to 60 basis points a year.

Eliminating these charges for long-term policyholders “can have a significant financial impact over the long term,” says Ted Kilkuskie, chief marketing officer for individual life. “It means more money will remain invested where policyholders want it–in the underlying funds.” That should result in greater potential for asset accumulation within the policies, he says.

The change is possible, Kilkuskie adds, because Hartford Lifes “growing asset base has created significant financial efficiencies” resulting in reduced costs that the company is now passing on to customers.

The four polices are issued by Hartford Life Insurance Company and Hartford Life and Annuity Insurance Company.

Reproduced from National Underwriter Life & Health/Financial Services Edition, August 5, 2002. Copyright 2002 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.


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