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.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.
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.
“The goal of the new Sun Retirement Health Assist product is to broaden the options for long-term care insurance in Canada. It’s a product targeted at clients actively planning their retirement and their income in retirement: age 55 to 65. These individuals may have existing or unstable medical conditions that can preclude them, or postpone them, for traditional long term care insurance designs,” comments Laurel Pedersen, AVP of health insurance product development at Sun Life.
Sun Life has limited the issue age “to target the solution at those actively planning their retirement and aware of the possible risks of physical and cognitive dependency as they age,” says Pedersen. “Clients interested in broader protection against dependency due to accident and illness, that can happen at any stage of life, will look to disability income insurance, critical illness insurance and traditional long term care insurance.”
Pedersen explained that the product’s limited flexibility does result in some advantages, including the price. She notes that premiums are 30% to 60% lower than for traditional long-term care insurance, and points out that the product is intended to complement retirement savings as part of an overall financial plan.
“By making coverage effective at age 65 and beyond we have focused the solution on protecting against the catastrophic impact the cost for care can have on a retirement plan later in life. This same future-focus means the application and underwriting for the product is simplified,” she explains.
Sun Life surveyed its sales force when developing the product. “We asked advisors what they needed to be successful in the long term care insurance market. Advisors want options to help more clients qualify for the coverage and the ability to match the cost of the solution to the client’s financial plan,” says Pedersen.