An Allstate Corp. life insurance unit is celebrating Life Insurance Awareness Month by introducing an unusual type of life insurance: a term life policy that provides most of the death benefits in the form of monthly benefits payments, rather than one big lump sum.
Allstate is calling the new product the Monthly Income Term policy, and issuing it through the Allstate Assurance Company subsidiary.
Offering the death benefit in the form of a “monthly paycheck” should make it easier for people to use the product to protect their families’ standard of living, Allstate says.
The Northbrook, Illinois-based company is offer a digital slider tool to help agents explain the product.
Customers can use the slider to see how changing the product term length, benefit period and death benefit amount affects the price.
The product does provide a one-time benefit payment of $10,000 immediately after the death of the insured, to help the family cope with expenses related to the death.
Mary Jane Fortin, the head of Allstate’s financial businesses, said in a statement that life insurers need to make insurance options easier for consumers to understand.
“Too many people put off purchasing life insurance — when they can’t afford to,” Fortin said. “Purchasing a life insurance policy is a true act of love that protects what matters most.”
The Monthly Income Term Product Filings
Allstate Assurance has filed an actuarial memorandum describing the new product with the Interstate Insurance Company, an entity that takes in official documents related to insurance products for many states’ insurance departments.
The compact has posted a copy of the memorandum on its section of the System for Electronic Rates & Forms Filing (SERFF) website.
In the memorandum, Allstate Assurance says it will offer the policy for issue ages 18 through 65. The coverage will expire at age 71.
The policy has a minimum death benefit of $2,000 per month.
A related rider has a minimum death benefit of $5,000.
Beneficiaries who prefer to take the death benefit in the form of a lump sum can convert the monthly payment stream into a one-time payment.
Another filing in the SERFF system, a sample policy, shows a 35-year-old male nonsmoker, in standard health, paying $257.40 per year in premiums for a base policy with $3,000 in monthly income payments, to be paid for 60 months, and a term insurance rider that provides a $20,000 benefit.
— Read Danica Patrick Returns as Life Insurance Awareness Month Spokesperson, on ThinkAdvisor.