In a slow-moving market that is losing players, Sun Life Financial has quietly launched a new long-term care insurance product to complement its current offering. Other players, meanwhile, have integrated this product into existing life insurance products.
The market lost an important player when RBC Insurance suspended sales of its long-term care (LTC) insurance product in 2012. Since then, hybrid products have gained ground because they combine this less popular type of coverage with another that is more desired, such as life or disability insurance.
Desjardins Insurance also entered this market in September with a product that combines life and long term care.
Other insurers have offered hybrid products for several years, for example Tangible from Québec Blue Cross. This hybrid product is proving to be increasingly popular with clients who wish to obtain long-term care coverage at a reasonable cost, says Lucie Godin, sales and special projects coordinator with Blue Cross. “The hybrid product concept is very attractive because it combines coverages and enables greater accessibility to each,” she added.
The product’s features remain unchanged at present. “We haven’t felt the necessity to (modify it) since the product adequately meets the needs of this niche,” she added. In addition to long-term care, Tangible combines life insurance, critical illness and disability insurance.
As for Sun Life, it has opted for a stand-alone long-term care product. Sun Retirement Health Assist is less flexible than the insurer’s flagship long-term care insurance product. It is aimed at a smaller niche market, namely those who are either approaching retirement or who are already retired.
While it has definitions that are equivalent to those offered in Sun Life’s traditional LTC product, Sun Retirement Health Assist is less generous in other areas, notably in premiums and benefits. Premiums are payable for life while Sun Life’s other LTC product offers both a 25-year payment period and payments to age 65. The new product also only offers an unlimited benefit period, while Sun Life’s traditional policy offers 100, 150, and 250-week benefit periods.
Issue ages for the new product are restricted to ages 45 to 71 while the traditional policy is available from age 21 to 80. The insured person is free to use benefit payments however he or she chooses, and is not required to provide proof of services received. Furthermore, the waiting period before the first payment of benefits ranges between 365 and 730 days rather than the 90 to 180 days offered in Sun Life’s original LTC policy.
In its guide for advisors, Sun Life explains that the longer waiting period is meant to better manage the health risks that are faced by those in the later stages of life and retirement, which is the target demographic the insurer plans to serve with this product.
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Source for tables: InsuranceINTEL.
Compilation: The Insurance and Investment Journal, Ian Bolduc, Director, InsuranceINTEL.