It's debatable if the fiduciary standard is 'higher' than suitability. But the better question might be, who's holding the bar?
By Cyril Tuohy
American General has added a rider to its guaranteed universal life (GUL) policy that allows policyholders diagnosed with chronic illness to access the policy’s death benefit while they are still alive.
The rider, branded as Accelerated Access Solution, is available on American General’s Secure Lifetime GUL II, the company said.
“This new accelerated benefit rider can turn AG Secure Lifetime GUL II into life insurance the client doesn’t have to die to use,” Jay Drucker, vice president, product management with American General, said in a news release.
Policyholders who meet the criteria under the critical illness clause can use the funds to help pay for assisted living, nursing home care, adult daycare, “virtually any expense, even if not directly related to the illness,” Drucker said.
Critical illness monthly payout options include a percentage – 2 percent or 4 percent – of the benefit amount, or a flat rate set at the maximum allowable per diem allowable by the Internal Revenue Service at the time the benefit is exercised, the company also said.
Policyholders who opt for the rider can choose between the benefit paid out of anywhere between 50 percent and 100 percent of the base death benefit. Benefits are paid regardless of the costs incurred, the company also said.
As with many similar life insurance critical illness riders offered by competitors of American General, a doctor must certify the policyholder as chronically ill. Also, 90 consecutive days must elapse before the policyholder is available for the benefit payments.
American General, part of the AIG umbrella of insurance companies, is the latest life carrier to add critical illness benefits to the list of living benefits riders offered through an individual universal life insurance policy.
With expenses for critical illness like cancer or end-stage kidney failure running into the hundreds of thousands of dollars, the rider allows insurers to unlock the value stored in a life insurance policy to impart benefits on the policyholder who is still alive, but may not be for much longer.
In an interview with InsuranceNewsNet last year, brokerage general agent Michael Smith said critical illness living benefits available through the brokerage market were on the increase. In September 2012, about five life carriers were offering the riders, he said, but as many as eight new carriers were planning to offer them by spring 2013.
Cyril Tuohy is a writer based in Pennsylvania. He has covered the financial services industry for more than 15 years. Cyril may be reached at email@example.com.
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