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
MoneyGuard II, a universal life insurance with a long-term care rider introduced by Lincoln Financial this month, increased benefits and the flexibility with which buyers can pay their premiums in exchange for a stricter vesting schedule.
The company said its return-of-premium vesting schedule for MoneyGuard II begins with 80 percent in the first year, 84 percent in the second year, 88 percent in the third year, 92 percent in the fourth year, 96 percent in the fifth year and 100 percent in the sixth year.
Policyholders, however, have a choice of premium payment options of one through 10 years, Lincoln Financial said.
Lincoln’s older hybrid life insurance/long-term care policy, MoneyGuard Reserve Plus, had a more generous vesting schedule.
It returned 100 percent of premium in the first six months, 90 percent in the first 12 months, 92 percent in the second year, 94 percent in the third year, 96 percent in the fourth year, 98 percent in the fifth year and 100 percent in the sixth year.
Payment options for MoneyGuard Reserve Plus range from a single premium to payments spread out over three, five, seven or 10 years, the company also said.
Vesting schedules allow policyholders to get some of their money back – minus expenses, withdrawals, loans and benefits paid – if they decide they don’t need the coverage.
MoneyGuard II, as did its older MoneyGuard Reserve Plus sibling, offers inflation protection riders for an extra fee.
Lincoln offers three versions of its hybrid universal life/long-term care policy for advisors: MoneyGuard Reserve, MoneyGuard Reserve Plus and now MoneyGuard II.
In the states where MoneyGuard II is approved for sale, it will be sold in place of MoneyGuard Reserve and Reserve Plus, a Lincoln spokesman said. MoneyGuard II has no impact on existing policyholders of those previous generations, the company added.
Long-term care riders are showing up in life insurance policies with more regularity as the industry seeks to sweeten their life insurance product lines.
Other life insurers adding riders onto their life insurance platforms include Nationwide, Variable Annuity Life Insurance Co. and John Hancock.
Long-term care or chronic illness riders give buyers more reason to buy life insurance, which has lost its luster, weighed down by low interest rates.
Total annualized premium for universal life, variable universal life, term and whole life was flat at the end of the third quarter 2013 compared to 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, and the number of individual life policies in all categories also dipped 2 percent over the period, LIMRA said.
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 firstname.lastname@example.org.
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