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In a move to bring more young buyers into to the long-term care insurance fold, MetLife, New York, has debuted a new type of guaranteed purchase option for life insurance policies.
The Long Term Care Guaranteed Purchase Option rider, already approved in 35 states, can be sold with three types of MetLife life insurance policiesvariable, whole, and term. To add the rider, the base policy must have a face amount of at least $100,000.
Life insurance GPOs have been around for decades. These guarantee a life policyholder can buy additional amounts of life insurance at several future dates, without new underwriting.
By contrast, MetLifes new rider is an LTC insurance GPO. It guarantees a life policyowner can buy a comprehensive individual LTC policy from MetLife (or affiliate) at one of several future dates (five-year intervals, up to age 60)–also, without new underwriting.
Why the switch on GPO design? This is the first in a series of "life contingent products" that MetLife is developing to help consumers deal with the financial aspects of todays longevity and economic trends, says Joseph W. Jordan, senior vice president-marketing for MetLife Financial Services, the marketing and sales arm for MetLife.
It is designed for younger clients who are not yet ready to buy LTC insurance but who want to protect against the risk of losing their insurability for LTC when they are ready to buy, adds Mary Ann Brown, senior vice president-product development, individual business operations at MetLife.
With this rider, clients pay "a relatively low premium to preserve their right to buy the LTC in the future," she says.
The prevailing paradigm about LTC insurance–that only old people should buy itis hampering sales and leaving many people vulnerable to ending up without LTC insurance when they need it, says Jordan, explaining the rationale for the rider.
"Younger people tend to say, 'Im too young to buy this kind of insurance,'" he continues. The emphasis, for them, is on buying insurance that protects against the risk of dying too soon.
The problem with that, he says, is people today live longer than in previous eras. That means they must also prepare for the financial risks associated with living too long, especially since government assistance programs are waning. In MetLifes view, this preparation should include considering the purchase of LTC insurance.
A lot is at stake if they dont do that, says Brown. Younger people who put off LTC insurance decisions may develop health problems later on that make them uninsurable for LTC once theyre ready to buy, she explains.
Hence, the rider. As Jordan puts it, "the rider lets us offer a die-too-soon product (life insurance) that guarantees the right to buy a live-too-long policy (LTC) at a later date."
