Developing an entire new life insurance or annuity product can be difficult and expensive.
Life insurers want interesting new options to offer consumers.
Nationwide is using a common strategy to come up with a new option to offer consumers without much of a fuss: Adding a new timing-related choice to a new version of an existing insurance product.
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The company recently introduced the Nationwide No-lapse Guarantee Universal Life II, a new version of an existing universal life policy. One of the most obvious changes is that gives purchasers a choice: Consumers can decide whether they want to guarantee that coverage will last until age 70 or until age 120.
If they choose the age 70 option, and they want the no-lapse guarantee to last until age 120, they can switch to the age 120 option, with no additional underwriting, by the end of the 15th policy year, or the policy anniversary when the insured reaches age 65.
Actuaries’ mortality tables now extend until age 120.
Holly Snyder, a vice president in Nationwide’s life insurance business, said in a recent interview that many consumers now need the longest period of coverage, because they have coverage needs that will extend many years into the future.
“People are living longer,’” Snyder said. ”You don’t want to have to worry about outliving your insurance.”
But providing a no-lapse guarantee for coverage up to age 70 is cheaper than providing a guarantee for up to age 120, and some people may need and prefer the shorter, cheaper option, Snyder said
For Nationwide, offering the no-lapse guarantee period choice will be an interesting experiment.
“We don’t know what the experience is going to be,” Snyder said.
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