Offer Life Insurance You Don’t Have to Die to Use: An “Asset Protector” Package Enhances Flexibility

Originally published by: AIG Consumer Life Insurance

For the first time in the life insurance industry, you’re able to tell clients something
they’ve never heard before: “If you don’t die prematurely, you may be able to spend
your entire death benefit on virtually anything you want.”

Because of this sea change in the way life insurance death benefits can be accessed,
clients have the opportunity to view their life insurance policy more like an asset than an expense. That’s the concept that’s revolutionizing the life insurance industry. An innovative asset protector package has the potential to help increase clients’ financial security during retirement.

Chronic Illness Protection

Keep in mind that for many people, the biggest risk to their assets during retirement is a significant illness that would require expensive care. This could result from a physical problem, such as a debilitating stroke, or from a cognitive impairment, such as Alzheimer’s Disease.

To help protect assets from the devastating financial impact of these types of conditions, clients may be able to leverage a chronic illness rider that’s included or available with many permanent life insurance policies. If clients meet the rider’s criteria, they can access their life insurance policy’s death benefit – while they’re still alive – to pay for their health care or other expenses and help preserve their retirement assets for their surviving spouse. The access to cash value in the policy is available through an acceleration of the death benefit, although with a corresponding reduction in the benefit.

If clients live to age 85 or beyond and don’t suffer a chronic illness or a cognitive
impairment, their financial concerns may change again. They may be more
concerned about having sufficient income for the rest of their retirement. The solution is longevity insurance.

Longevity Protection

A longevity rider on a life insurance policy provides that when a client reaches the
age specified in the contract (for example, age 85), he or she can begin receiving a
percentage of the death benefit (for example, 10 percent) each year for a specified
number of years, such as 10.

With a $250,000 policy, that could mean access to an additional $25,000 per year.
With a $1 million death benefit, the available sum may be $100,000 per year for 10
years. As with a chronic illness rider, the access to cash value in the policy is through
an acceleration of the death benefit that reduces the death benefit accordingly. But
imagine what having “life insurance you don’t have to die to use” could do for clients’
financial security when their retirement portfolio may be straining to generate the
retirement income they need.

This hypothetical example is for illustrative purposes only. Not an actual case and intended solely to depict how the product features might work. It does not reflect the value of any specific Policy. Restrictions and limitations apply.

A Multipurpose Solution

Ultimately, whether clients are most concerned about dying too soon, living too long
or getting sick along the way, an asset protector package – comprised of a life
insurance policy, a chronic illness rider and a longevity rider – is designed to offer the flexibility to help clients achieve their financial goals.