Last month I wrote about some changes that have taken place in the underwriting of life insurance policies. Today I will touch upon some changes made to the products themselves. While the life insurance industry isn’t synonymous with innovation, there have been a few rather interesting developments lately.
The most interesting are the so-called hybrid policies, which are life insurance policies equipped with riders that can pay for long term care expenses. While hybrid policies have been around since the 1990s, the early ones were essentially long term care products built on a life insurance chassis. In other words, you couldn’t (nor would you want to) buy the policy without the LTC rider.
Some of the policies within the current generation of hybrids are actually quite competitive as stand-alone life policies. While not as flexible or customizable as LTC policies, they do offer two distinct advantages.
First, some of them can be purchased with a guaranteed lifetime premium. To my knowledge, no carrier currently offers an LTC product with a guaranteed lifetime premium. Second, in the event that the long term care coverage is not used, a death benefit will ultimately be paid.
While most of the hybrids underwrite for both mortality and morbidity, I’m aware of one company that currently doesn’t underwrite for the rider. That can be invaluable to someone who wants LTC coverage but can’t qualify for it, so long as he/she can qualify for the life insurance. Hybrids are available as whole life, universal life, and even term insurance.
Credit cards offer rewards points, so why not life insurance? Well, one company does just that. When you qualify for a policy, the company sends you a Fitbit to help you monitor your activity. By accumulating various levels of points, you can reduce your premium by 5, 10, or 15% per year.
One of the major complaints about whole life insurance is the lack of cash value in years one and two. Well, if you’re willing to increase your annual premium by approximately 15% (age and health status affect this figure), then you can have almost 90% of the premium in the year one cash value, and 100% of cumulative premiums by policy year 5.
So while maybe not innovative when compared to technology companies, the life insurance has been introducing new products and improved methods of underwriting those products. The end result is that it is now easier and cheaper to get insured than at any time in history. So if you don’t feel that your life insurance program is up to snuff, now is the time to do something about it.