By Cyril Tuohy
Looking to make its whole life policies more flexible and attractive to consumers, New York Life announced it has introduced a level premium chronic care rider to newly issued standard and custom whole life insurance policies.
“With this feature, there is even more value to the policyholder in the form of additional protection for their family in the case of chronic illness,” Craig DeSanto, senior vice president of New York Life, said in a news release.
Standard whole life provides death benefits, accumulates cash and offers the potential for the policy to earn dividends.
Custom whole life offers the same benefits as standard whole life but allows policyholders to choose how long they want to pay premiums. It is designed to build the cash value more quickly, and that cash value can be accessed once the policy is paid up, the company said.
The chronic illness rider is available for a fee, the company added.
New York Life is the latest life insurer to add chronic illness riders to bread-and-butter whole life and universal life policies in an attempt to offer more attractive living benefits to the policyholder. This is in the hope of boosting sales in the life insurance market.
Whole life new annualized premium rose 2 percent in the third quarter, compared to the third quarter in 2012, and policy count was flat, according to LIMRA statistics. Universal life sales are down over the same period.
Earlier this month, Prudential Financial subsidiary Pruco Life Insurance introduced a universal life benefit rider that advances the entire death benefit to pay for a chronic or terminal illness. For example, American General announced in December that it added a chronic illness rider to its guaranteed universal life policy.
For New York Life whole life policyholders who opt for the chronic care rider but end up not using it, the premium can be passed on the beneficiaries or as cash values. The chronic care rider is triggered only after the policyholder is certified as permanently chronically ill, the company said.
Life insurers are introducing chronic care riders as the cost of managing chronic diseases – asthma, Alzheimer’s disease, breast cancer, diabetes and heart disease – continues to rise and consumers are often left contributing higher percentages of the total cost.
Chronic diseases are defined as long-lasting conditions that can be controlled but not cured, according to the University of Michigan’s Center for Managing Chronic Disease.
The annual cost of diabetes in the U.S. came to an estimated $174 billion and affects about 25.8 million people, or 8.3 percent of the population, according to the 2011 National Diabetes Fact Sheet published by the Centers for Disease Control and Prevention.
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 protected].
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