In an environment where long-term-care (LTC) insurers seem to be struggling to survive, New York Life recently launched a new type of standalone LTC solution. Dubbed NYL My Care, it's a low-cost option with some unique features.
But why should New York Life, the nation's largest mutual life insurance company, introduce a new product into a marketplace that's seen providers drop out and others raise rates dramatically just to stay afloat?
"We realized that the marketplace had evolved to favor the affluent, away from the middle-market customer who is probably most at risk financially from an LTC event," said Aaron Ball, vice president of New York Life Long-Term Care. "We saw the need to design a solution that's both affordable and simple to understand."
The company already offers a gamut of other LTC products, from linked-benefit life insurance and annuities to chronic-care riders that accelerate the death benefit on certain life insurance policies, and even another standalone LTC insurance plan called NYL Secure Care. But the new plan is designed to be something different.
Unlike most traditional LTC plans, NYL My Care takes a page from other types of insurance by including a deductible and a 20 percent coinsurance feature. In that sense, policyholders share a degree of the risk. In return, they enjoy lower premiums.
The plan also offers four different tiers of coverage, and corresponding premium levels: bronze, silver, gold and platinum. This allows clients to "choose a coverage level that suits their risk tolerance and budget," said Ball.
As with many other LTC policies, benefits can be used for home care, community care or facility-based care and equipment. Unlike other policies, there is no time limit for how long coverage can last (although the policy caps the maximum benefits that are payable, depending on how much coverage a policyholder purchases). Elimination periods have been eliminated, so reimbursement of covered expenses can begin once the deductible is satisfied. Once the deductible is satisfied, it never needs to be met again.
In addition, the plan features several inflation-protection options, as well as the ability to add coverage to the same policy up to age 70; a return-of-premium provision for a beneficiary if the policyholder dies before reaching age 65; a waiver-of-premium provision after the deductible has been met; and international coverage—all standard.
"We met with more than 1,200 consumers and a thousand advisors to gather feedback about what they liked and did not like in current LTC offerings," Ball explained. "We included more of what they like as standard in our base contracts and excluded features they were paying for and didn't use."
Besides the deductible and coinsurance, another way NYL My Care keeps premiums down is by offering a dividend. If claims, interest rates and other financial considerations meet or exceed the company's expectations, a portion of its intake is paid back to policyholders. "That's an advantage of our being a mutual company," said Ball. "Carriers that are stock companies have to pay such premiums to shareholders, but we give it to our customers."