New York Life Insurance Company is using a dividend feature to give buyers of a new long-term care insurance (LTCI) policy a chance to benefit if interest rates rise.
See also: John Hancock seeks LTCI growth
The company is including the dividend feature with the new NYL Secure Care LTCI policy. The policyholder first becomes eligible to get the dividend in the 11th policy year. The dividends are not guaranteed and are subject to the approval of the company’s board. But, if the dividends do well, they could eventually reduce the out-of-pocket cost of the premium payments significantly, the company says.
Record low interest rates have hurt issuers of LTCI coverage and other types of insurance policies that pay benefits over a long period of time, by reducing the yields insurers can get on assets invested in high-grade corporate bonds, mortgage loans, and other classes of investments favored by insurance regulators and credit rating analysts. Other insurers, including John Hancock, a unit of Manulife Financial Corp. (TSX:MFC), have also been developing products that will let policyholders benefit from rising interest rates without locking the insurers into prices based on the assumption that interest rates are sure to rise.
Aaron Ball, a vice president at the New York Life Long-Term Care Business, said in a statement about the new product that the company also designed the policy to maximize policyholders’ ability to get care from friends and family members.
New York Life says it will arrange for caregiver training for an insured’s friends and for relatives other than spouses or partners. Secure Care policyholders can use their benefits to pay friends and relatives who have gone through the caregiver training.
Policyholders can also use their benefits to pay for respite care for informal caregivers, some types of home modifications, adult day care and assisted living facility care, as well as for nursing home care, the company says.
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