I am always hesitant to give much attention to bells and whistles added to life insurance. Historically the bells and whistles have been a way to drive up the premium with little or almost no risk that the life insurance company will ever have to engage in paying out. A good example of just how confident companies are about extra benefits not being used in most cases is the fact that for years they have offered the accelerated death benefit for terminal illness for free. This one isn’t too tough for them to swallow because they understand that they will be paying out the full death benefit within a year and since the product has changed with most companies from a privilege to a loan, they actually make money on the deal. Not much, but more than they would have if nothing were accelerated.
Let me be clear that I am not yet endorsing the new Transamerica living needs term life insurance policy, but my initial take is that, dependent on cost, it might have some value to it as long term care insurance costs skyrocket. It has three levels of benefit, chronic illness, critical illness and terminal illness and for each of these it has a percentage of the death benefit that is available to be paid out. Though those amounts are theoretically 24% for chronic illness, 90% for critical illness and 100% for terminal illness, if I understood the presentation correctly the company actually assesses the situation and makes you an offer on what they will accelerate and if you choose to accept it there is a substantial administrative fee. There is also a waiting period for how long the policy has to be in force before benefits are available which I found completely reasonable. They won’t pay chronic illness benefits until the policy is in force 2 years, critical illness 30 days and terminal illness immediately.
Chronic illness is defined as “Chronically ill means that the insured has been certified, within the last 12 months, by a licensed
health care practitioner as being unable to perform two of the six activities of daily living without
substantial assistance from another person for at least 90 days, or being severely cognitively impaired
for at least 90 consecutive days. The activities of daily living include: bathing, continence, dressing,
eating, toileting and transferring.”
Critically ill is defined as, “A critical illness is one of the qualifying events: heart attack, stroke, ALS (Lou Gehrig’s disease), cancer, kidney failure, blindness due to diabetes, paralysis (loss of use of two or more limbs), and major organ transplant.”
While Trans is no powerhouse in impaired risk underwriting one of the things that really stood out with this bell was the fact that it is available even if you already have health issues and would be rated higher due to that. I can see companies throwing this out there for their preferred plus and preferred clients, but when it’s available to someone with a table rateable health issue, well, interesting at least. Again this is BC for me, before cost, so again I’m not endorsing or selling the product yet.
There is a you tube presentation of the product that can bring you up to the same speed I’m at. It’s designed for agents but I found it straight forward enough that I think most people can get the gist of it. It’s not a long term care replacement, but honestly I think long term care has a lot of problems, primarily keeping the premium affordable.
Bottom line. It appears to be a product worthy of some study and I intend to do that. If you have any specific questions about the product or would like to see pricing on it, please call or email me directly. My name is Ed Hinerman. Let’s talk.