Desjardins Financial Security (DFS) has developed a new hybrid critical illness product. The news was announced by Nathalie Tremblay, health products manager at DFS in an interview with The Insurance and Investment Journal. She said that, after analyzing the products that were already available in the market, DFS wanted to set itself apart.
“This critical illness product offers long-term care protection as soon as the contract comes into force,” says Ms. Tremblay. If someone loses his or her independence, after three months, the insurer will pay out a minimum of 10% of the amount of insurance. If after that the person has no chance of regaining their independence, the insurer will pay the full amount.
Ms. Tremblay says that Desjardins does not wait until the person’s loss of autonomy is permanent before paying out insurance proceeds. No matter what the individual circumstances, some funds will be paid to him or her. “That’s what makes the difference,” she comments.
What’s more, for this product, DFS has replaced regular payments with a lump sum benefit. Ms. Tremblay gives the example of someone who has permanently lost autonomy and who has a $100,000 long-term care policy. Some companies would pay him or her 1% of the $100,000 face amount over 100 months, distributing $1,000 a month for eight years. “With DFS, the person will receive $100,000 in a single payment,” she explains.
Another scenario is if the insured receives 10% of the insurance because of a loss of autonomy but, instead of suffering from a permanent illness, recovers after three months. In this case, DFS will keep the remaining amount of insurance in force. If the insured is later struck by a covered critical illness, Ms. Tremblay says the insurer will pay out the remaining 90%.
The product is also a way to introduce long-term care products, she comments. She suggests that it gives advisors an opportunity to explain what long-term care insurance is, and to discuss the social issues to which it is related.
DFS has also made changes to how premiums are refunded. The insurer has withdrawn the old pay scales for permanent products and is offering two new options. One refunds 100% of premiums after 15 years, and the other refunds 100% after 20 years. “We are able to offer a partial refund of 15% of all paid premiums after the contract has been in force for four years,” says Ms. Tremblay. “The more time that passes, the larger the refund will be.”
DFS has made other changes in its critical illness product line. The executive health savings plan, a product aimed at the business market, has a new feature.
“We realized that these individuals’ income levels fluctuate more than that of the average person. If there is a drop in capital protection before the policy has been in force for more than ten years, we consider, when refunding premiums, that the new premium has been paid since the beginning,” says Ms. Tremblay.
If the policyholder pays a premium of $20,000 per year for five years, but the following year has difficulty paying, DFS would allow him to delay the premium payment for one year. However, the following year, he would have to pay $40,000 to make it up. If however, this client is struck by a critical illness before making the catch up payment, DFS would pay the benefit, but deduct the missing premium payment from this amount.
If, at the end of the year, the policyholder is not able to pay the two premiums, he would be issued a premium refund.”
DFS also made changes to its SOLO product, an insurance plan that supplements provincial health care benefits. The product has existed since 2002 and is like a group health care plan, but for one person. “We did not have coverage to complement Quebec’s provincial drug insurance plan. So we have added it,” comments Ms. Tremblay. She notes that this is the kind of insurance most sought after by consumers. There will be two levels of drug insurance protection: one with a $2,000 maximum per person, and one with unlimited drug coverage.