5 Things to Know About New York Life's New LTCI Policy

New York Life Insurance Company is a big, well-established, top-rated insurer that says it wants to sell consumers stand-alone long-term care insurance (LTCI).

The New York-based company recently unveiled the NYL My Care LTCI policy — a companion to its existing NYL Secure Care Policy.

The initial product announcement emphasized affordability, and it focused on purchasers’ ability to protect themselves against inflation by buying more coverage. The company downplayed discussions of other inflation protection options.

But the New York Life LTCI team says the idea that the NYL My Care policy is a bare-bones, limited policy is incorrect.

“We believe that describing NYL My Care as ‘simplified’ is more accurate,” the New York Life LTCI team said in a written response to questions about the product. “The product includes robust built-in benefits and limited moving parts to simplify the consumer purchase experience.”

Consumers who hate complexity can choose standardized bronze, silver, gold or platinum coverage options, but consumers who want coverage tailored precisely to suit their needs can get customized coverage, the New York Life LTCI team said.

These days, securities analysts, rating analysts and regulators are continuing to look hard at insurers LTCI operations, due to the effects of low interest rates and some companies’ inaccurate pricing assumptions on LTCI block performance. Many insurers focus on serving the long-term care (LTC) planning market through life insurance policies or annuity contracts with LTC or chronic care benefits features. New York Life itself sells a life-LTC hybrid.

But many LTC planners who have seen the effects of catastrophic LTC needs on families first-hand strongly prefer stand-alone LTCI, because of the ability of stand-alone LTCI to turn a modest monthly premium into a large pot of LTC benefits.

Some other insurers have added or updated stand-alone LTCI options in the past few years. National Guardian Life Insurance Company, for example, has been moving ahead with efforts to get its EssentialLTC policy licensed in more states. But signs of serious interest in the stand-alone LTCI market at big insurers could help other LTCI market players, too.

Here’s a look at possible answers to five questions about the NYL My Cares policy a financial professional’s clients might have about the policy, drawn from the New York Life LTCI team’s written comments.

1. How Is the NYL My Care policy different from the NYL Secure Care policy?

The new product covers many different types of care, including nursing home care, assisted living stays, home care and community care. So does the new policy.

The main differences are that the new policy comes with a predetermined pool of money, ranging from $50,000 to $500,000, rather than a benefit period; the policy comes with a one-time cash deductible rather than an elimination period; and New York Life is holding down the premium by sharing 20% of the LTC costs with the policyholder, through a coinsurance feature.

3. What kinds of inflation protection options does the new policy offer?

An option to cope with increases in the federal government’s Consumer Price Index for Urban Measures, or CPI-U, by buying more coverage is built into the basic policy.

New York Life also offers policy riders providing automatic compound annual benefits growth of 2%, 3% or 5%.

A purchaser who buys customized coverage can get a rider that increases the benefits along with the CPI-U.

5. What is a mutual life insurer, and why might a client think about buying LTCI from a mutual insurer?

New York Life, which was founded in 1845, is a mutual life insurer.

A mutual life insurer is a company owned by its policyholders.

Mutual life insurers typically pay dividends to the policyholders when policyholders hold down the claims for a particular type of policy. That gives the policyholders an incentive to help hold down claims.

The dividend feature also gives New York Life a way to share good fortune with the LTCI policyholders, according to the New York Life LTCI team.

The team noted that New York Life has taken a conservative approach to designing the new policy. A mutual insurer like New York Life “can return this conservatism to the policyholder through the dividend feature,” the team said.