AIG Launches VUL Policy With Chronic Illness Rider

By Cyril Tuohy

InsuranceNewsNet

American International Group (AIG) has announced the launch of a variable universal life (VUL) insurance policy with an optional chronic illness rider, a feature that offers policyholders more flexibility to access benefits while the policy beneficiary is still alive.

The policy, marketed as AG Platinum Choice VUL, offers a death benefit, cash accumulation and the opportunity to take advantage of market gains, AIG said in a news release.

VUL policies have sold well this year as financial markets continue to notch strong gains, and as millions of retirees look for ways to take advantage of those gains in an era of low interest rates.

Third quarter annualized VUL premiums increased 22 percent compared to the year-ago period, according to LIMRA.  VUL premiums increased 26 percent in the first three quarters of 2014, LIMRA said.

VUL premiums have also outpaced premiums generated by universal life, term and whole life insurance lines, LIMRA data also show.

John Deremo, executive vice president and chief distribution officer of life insurance with AIG Financial Distributors, said in a news release that Platinum Choice VUL offers advisors and distributors a “robust yet flexible financial vehicle,” combining customizable life insurance protections with 46 professionally managed investment options.

AG Platinum Choice VUL is suited for individuals under the age of 65 who need life insurance protection while at the same time want to accumulate cash in a tax-advantaged vehicle, AIG said.

The policy fills a need among policyholders who want a death benefit with some growth potential, or policyholders looking to customize their coverage with optional riders, the company said.

Chris Ogburn, vice president of life insurance product management with AIG Consumer Financial, said in a statement that Platinum Choice VUL allows policyholders to protect beneficiaries and a policyholder’s financial assets.

The chronic illness rider offers a payout of either 2 percent or 4 percent of the benefit amount per month, or at a per diem rate, which the Internal Revenue Service has set at $330 per day in 2015, AIG also said.

Chronic illness riders are a relatively new concept, though the benefit they offer has existed for many years in the form of long-term care insurance which addresses the policyholder’s inability to perform activities of daily living.

In March, AIG launched Elite Index II, an index universal life (UL) insurance policy that offers an optional chronic illness benefit rider.

Chronic illnesses cost the nation an estimated $725 billion annually, according to the SCAN Foundation.

Cyril Tuohy is senior writer for InsuranceNewsNet. He has covered the financial services industry for more than 15 years. Cyril may be reached at cyril.tuohy@innfeedback.com.

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Cyril Tuohy is a writer based in Pennsylvania. He has covered the financial services industry for more than 15 years. He can be reached at cyril.tuohy@innfeedback.com.