New York Life earlier this year introduced the New York Life Asset Flex universal life insurance policy with long term care benefits as a way for consumers to plan for their financial long term care needs later in life while protecting their retirement savings.
The Asset Flex policy will be New York Life's entry into the popular space of hybrid long term care insurance policies dominated by policies such as Lincoln Moneyguard II, OneAmerica Asset Care and others.
Hybrid policies have been soaring in popularity, while traditional LTC policies have been losing ground. From 2012 to 2017 traditional LTC policy sales have declined by 65%. Meanwhile hybrid LTC or "combo" life & LTC policy premium have increased from $2.4 billion in 2012 to over $4 billion in 2017.
Hybrid policies are popular with consumers because they allow you to re-position assets that will provide you with long term care benefits should you need care, life insurance coverage should you not need care; as well as a money back guarantee provision should you change your mind. Additionally, premiums for hybrid policies are fixed and guaranteed. You are able to avoid the "use it or lose it" component of traditional LTC policy premiums, as well as escape the risk of premium increases inherent in traditional policies.
In April 2016, NY Life brought forth into the marketplace an overly high-priced traditional long term care insurance policy (pitched through AARP marketing) which I categorized as an extremely poor insurance value when compared with other traditional LTC insurance policies. With this backdrop of expensive New York Life traditional LTC insurance pricing in mind, let's take a close look at the New York Life Asset Flex hybrid policy to determine if New York Life might have a policy worth considering in the hybrid long term care insurance arena.
How does New York Life Asset Flex work?
Asset Flex is a modified single premium universal life insurance policy that will allow you as the insured to accelerate some or all of your life insurance benefit for long term care needs. Should you exhaust your life insurance benefit entirely, Asset Flex will provide you with an Extension of Benefits (EOB) for long term care rider.
The New York Life Asset Flex policy will accelerate your life insurance benefit to you for long term care needs over a 24 month or 36 month benefit period. Should you exhaust entirely your life insurance benefit, Asset Flex will provide you with an additional 24 months or 48 months of long term care benefits.
Like most hybrid long term care policies, the 6 year benefit period duration will be the most popular design. This will equate to a 24 months LTC Acceleration Benefit Duration plus a 48 Months Extension of Benefits rider.
For a 60 year old purchaser which is the typical age of a buyer, the life insurance benefit will equal approximately 1.5 times the premium deposit. The long term care benefit will equal approximately 4.5 times the premium deposit.
So, for a 60 year old a $100,000 deposit will provide approximately $150,000 of life insurance or $450,000 of long term care benefits.
A few of the standard New York Life Asset Flex contract provisions are:
Payment Options: Premiums may be paid in a lump sum or in annual installment options over 5 years or 10 years.
Policy Type: Reimbursement model, receipts required for qualified care services as defined in the contract.
Waiting Period: 90 day waiting period once per lifetime at claim time. The Waiting Period is waived for home care if a Care Coordinator Plan of Care benefit offered by NY Life is utilized. Facility waiting period of 90 days is required.
Return of Premium: Choice of Vested ROP schedule over 5 years or 100% Return of Premium. Your LTC Monthly benefit is higher with the 5 year Vested ROP option.
Residual Death Benefit: 10% of the life insurance face amount. At the death of the insured the greater of the residual death benefit or the remaining life insurance benefit will be paid to the beneficiary.
Informal Care: Asset Flex will pay a limited benefit equal to 1/60th of the monthly benefit for a period of 365 days for care received by a friend or family member (Partners excluded).
Inflation Protection Option: For additional premium on the policy anniversary date in policy years 2-16 you may elect to increase your long term care monthly benefit by 5% compound, which will also increase your life insurance face amount. If the inflation protection option is not elected on the 2nd policy anniversary or subsequent policy anniversary the inflation protection option will be forfeited. (This inflation protection option is very expensive, by the way)
Spouse's Paid-Up Insurance Purchase Option: Upon your death, your spouse if named as a beneficiary will have the right to purchase a single-premium whole life policy with no medical underwriting. (No acceleration of whole life benefits for LTC would be included).
World Wide Coverage: Equal to 3 x monthly benefit for care received outside the United States.
Most of the New York Life Asset Flex contractual provisions are fairly standard for the industry.
One extremely important note of caution: The New York Life Asset Flex policy, however, does not include very competitive inflation protection options. Automatic inflation protection is important for your long term care policy because you want your monthly long term care benefit to have value in 20 or 25 years when you are more likely to make a claim.
The New York Life Asset Flex policy only includes one inflation factor option, 5% compound. This inflation protection option is not built-in. This inflation protection component is only available as a future purchase option. New York Life will charge you additional premiums over 15 years for this purchase option and your premiums are a graded premium design meaning your annual additional premium to buy your inflation protection option becomes larger every year. Additionally, if you decline an option to purchase the inflation protection benefit increase, you will forfeit the right to receive any future purchase offers for inflation protection.
This purchase option approach is different than the inflation protection approach on all other hybrid long term care insurance policies. With the other leading LTC policies, your inflation protection purchase is built-in up front to your benefits with your single premium. You are not charged additional increasing premium annually such as the method of New York Life is employing within this Asset Flex policy.
Most importantly, in reviewing the additional premium cost for the inflation protection option with Asset Flex it is a very expensive option to include. My estimation is that most consumers will not be including the inflation protection option within their NYL Asset Flex policies. Or, viewing the issue from the opposite direction most NY Life agents will not be offering inflation protection within the illustrations the New York Life agent presents to you.
How does New York Life Asset Flex compare to the best hybrid long term care policies?
Today there are approximately a half-dozen hybrid long term care insurance policies being marketed. The standard bearers in the industry for the past 20 to 30 years are the Lincoln Moneyguard policy for individual policies and the OneAmerica Asset Care policy which has a patent on joint life for couples. Recently, Pacific Life and Minnesota Life have also introduced very compelling combination long term care policies.
For the purposes of keeping this price comparison simple, let's compare the New York Life Asset Flex pricing and benefits with two of the better individual hybrid long term care insurance policies: Lincoln Moneyguard II and Minnesota Life SecureCare.
For this policy comparison we will look at age 60 year old male and female pricing. Lincoln Moneyguard and Minnesota Life do not have health classifications. Everyone gets the same health classification with Lincoln and Minnesota Life.
We will examine the New York Life Asset Flex policy at its best health classification Elite Non-Tobacco. If the NY Life benefits do not compare well at its Elite Non Tobacco classification, the New York Life benefits will not compare well at any health classification.
For the purpose of this policy comparison we will look at a $100,000 single premium. Each policy will be illustrated to maximize its long term care benefits for you based upon utilizing the best benefit period and inflation protection factor to accomplish this objective.
|New York Life||Minnesota Life||Lincoln Financial|
|Inflation||None||5% compound||3% compound|
|Age 60 benefit||$6684 mo.||$3958 mo.||$5452 mo.|
|Age 60 Total Pool||$481,227||$323,084||$423,154|
|Age 80 benefit||$6684 mo.||$10,503 mo.||$9846 mo.|
|Age 80 Total Pool||$481,227||$857,274||$764,263|
|Age 85 benefit||$6684 mo.||$13,405 mo.||$11,414 mo.|
|Age 85 Total Pool||$481,227||$1,094,123||$885,990|
You can see in reviewing the above benefits for the single pay premium deposit of $100,000 that there is a staggering difference in future long term care insurance benefits available within the New York Life Asset Flex policy when compared to both the Minnesota Life and the Lincoln Financial linked benefit LTC policies.
Most long term care claims will occur at age 80+.
For policy analysis it is critical to examine the benefits available at age 80.
The Minnesota Life policy benefits are particularly attractive due to the availability of the 5% compound inflation factor option within this policy for male applicants. The Lincoln Moneyguard LTC benefits with automatic 3% compound inflation increases, however, are still reasonably competitive.
You will see that the Lincoln and Minnesota Life benefits will crossover and exceed the New York Life monthly LTC benefits at age 68. After age 68 the Lincoln and Minnesota Life benefits become increasingly more valuable with each passing year.
Both Minnesota Life and Lincoln Financial will offer the 60 year old male approximately $10,000 monthly LTC benefit at age 80 and between $764,000-$857,000 in total benefits. By age 85 the Minnesota Life benefits will separate due to its higher 5% compound inflation protection factor.
In contrast to these 2 policies, New York Life Asset Flex will offer you only $6684 month, and total benefits of $481,000. And only if you are in Elite health! The New York Life benefits might even be worse for you after your health underwriting is completed!
Now let's look at the New York Life Asset Flex pricing for females.
|New York Life||Minnesota Life||Lincoln Financial|
|Inflation protection||None||3% Compound||3% compound|
|Age 60 benefit||$6132 mo.||$4842 mo.||$4832 mo.|
|Age 60 Total Pool||$441,474||$375,828||$375,077|
|Age 80 benefit||$6132 mo.||$8745 mo.||$8727 mo.|
|Age 80 Total Pool||$441,474||$678,786||$677,431|
|Age 85 benefit||$6132 mo.||$10,138 mo.||$10,117 mo.|
|Age 85 Total Pool||$441,474||$786,899||$785,328|
You can see that we have the same outcome for female applicants.
By age 65 the Lincoln Financial and the Minnesota Life policy benefits have crossed over and will exceed the New York Life Asset Flex LTC insurance benefits.
Without the inclusion of the automatic inflation factor, the New York Life Asset Flex benefits will provide only $6000 month in benefits at ages 80-85 whereas the Lincoln Moneyguard and the Minnesota Life SecureCare policies will provide $9000 to $10,000 month in long term care insurance benefits for the female policyholder.
I do find it interesting how the female pricing is almost identical between the Minnesota Life and the Lincoln Financial policies.
In reviewing these benefits, we can clearly state that the New York Life Asset Flex policy is an absolutely poor value for you when compared to other long term care focused hybrid policies. Attached below are links to the illustrations referenced above.
New York Life Asset Flex illustration with inflation protection
Now, you might be curious to see how much premium New York Life will want to include the inflation protection within its Asset Flex policy. Well, I hope you are sitting down for this information because you might fall off your chair.
For the 60 year old male, to include 5% compound inflation protection on its $6684 monthly LTC benefit above the NY Life Asset Flex policy will require additional premium contribution over years 2-16 in the amount of $157,055 in addition to the single premium of $100,000 for a total premium outlay of $257,055 over 16 years! Yikes! Your Minnesota Life premium will be $100,000 less expensive than this NYL Asset Flex policy cost.
New York Life Asset Flex conclusions
Obviously, we can not recommend the New York Life Asset Flex policy for your long term care planning needs under any circumstances.
There are numerous hybrid long term care insurance policies that are much more competitively priced than this New York Life policy.
Keep in mind, we did not even look at probably the most competitive policy for couples, the OneAmerica Asset Care joint policy with Lifetime long term care benefits.
For the same premium dollars, $100,000 per person ($200,000 total) the joint OneAmerica Asset Care policy will provide a 60 year old couple greater than $10,000 per month per person and Unlimited Lifetime benefit periods each. See the worksheet for this joint policy below.
The bottom line is that New York Life has priced this Asset Flex policy for its benefit and not for your benefit. For the same premium dollars, you will be able to receive significantly greater long term care benefits with other underwriters. You will receive hundreds of thousands of dollars more in long term care insurance coverage elsewhere.
This is not surprising to me. This is the very same conclusion that we reached with the traditional LTC policy that New York Life sells.
The New York Life long term care insurance policies are priced at the most expensive range in the arena, both hybrid and traditional.
As I noted in my prior review of the New York Life traditional policy you must be very careful when speaking to a NY Life sales agent. Most New York Life agents are captive agents and by contract may only sell you New York Life policies.
You might have an existing relationship with a NY Life sales agent in which case the NY Life agent might seek to leverage the relationship with you to have you purchase inferior long term care insurance policies.
Or you might just be an AARP member.
If so, AARP will lead you to a NY Life agent. AARP and NY Life entered into an exclusive marketing arrangement for long term care insurance sales two years ago.
Please understand that AARP insurance marketing does not mean an insurance policy is better for you. It simply means you are being marketed to. Most people today are aware that AARP has a subsidiary AARP Services, Inc. that is "for profit."
AARP Services, Inc. processes billions of dollars per year in insurance revenue.
The House of Representatives Ways and Means Committee wrote an extensive report on the “for profit” nature of AARP Services, Inc.
Many consumers have expressed to me that the NY Life agents have insinuated to them that AARP has given its "stamp of approval" to the New York Life policy. Please do not fall for this sales tactic. You need to buy the best policy for you regardless of the existing marketing arrangements. The New York Life long term care insurance policies are nowhere close to being market competitive. Do not waste your time applying for this policy.
To find your best long term care insurance options, please call me direct toll free at (800) 891-5824 or fill out my quote request form below. As an independent agent licensed in 50 states I will help you compare your best long term care insurance options with all companies including Lincoln Moneyguard, Mutual of Omaha, Minnesota Life, Mass Mutual, OneAmerica/State Life, Pacific Life, Nationwide, New York Life, Northwestern Mutual, Thrivent and more. Call us today for your customized illustrations. We are your "one stop shop!"