By Cyril Tuohy
RiverSource Life has introduced a universal life insurance policy with an accelerated benefit rider for long-term care to help pay for covered long-term care expenses, the company said in a government filing.
It is the latest example of a life insurance company “bolting on” long-term care coverage onto a life insurance chassis.
The base feature of the product marketed as TrioSource is a fixed universal life insurance policy with a guaranteed death benefit, the company said in the filing. TrioSource is sold through advisors.
TrioSource offers a guaranteed return of premium. The policy returns 90 percent of the premium in years one and two, and 100 percent of the premium in year three, or any year thereafter net of surrender charges, outstanding loans and long-term care benefits paid, RiverSource said.
The company said that, depending on the need, the policyholder can access income-tax-free benefits for long-term care expenses, pass on an income-tax-free death benefit to heirs or get the money back.
Annuity and insurance products provided by Ameriprise Financial and its subsidiaries are sold through the RiverSource name.
Fewer companies are selling long-term care insurance as a stand-alone policy. Instead, they are incorporating long-term care riders onto life policies. Life insurance sales, suffering from low interest rates, are more attractive when they have a little extra to offer such as a long-term care or chronic illness rider.
Nationwide and Variable Annuity Life have recently included riders onto their basic life insurance platforms. This week, John Hancock announced it was making a long-term care rider for its life insurance products more flexible.
The John Hancock rider provides policyholders with more coverage for retirement planning and helps with estate planning, Hancock said.
“Adding the enhanced LTC rider to any of John Hancock’s permanent single life products is one simple solution – providing both death benefit protection and long-term care coverage,” Mike Doughty, president of John Hancock Insurance, said in a statement.
Life insurance sales have flat-lined in recent years as interest rates dropped to near-record lows last spring.
Total annualized premium for universal life, variable universal life, term and whole life was flat at the end of the third quarter 2013 compared with the third quarter in 2012, according to the U.S. Individual Life Insurance Sales Summary Report issued by LIMRA.
Face amounts declined 2 percent over the same period the total number of policies in all categories dipped 3 percent, with face amounts declining 2 percent over the same period, according to LIMRA.
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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