December 20, 2017. 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/ AARP Members 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 2019 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 $6 billion in 2019.
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 3.3x (women) - 4.0x (men) 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 25 to 30 years are the Lincoln Moneyguard policy; and the OneAmerica Asset Care policy which offers Unlimited LTC benefits. Lincoln Moneyguard III is no longer price competitive, however. OneAmerica will still be a very good option for Unlimited LTC benefits for couples.
In the past 4 years, Nationwide Financial and Securian Financial have introduced two of the the most compelling hybrid long term care insurance policies. Nationwide CareMatters II and Securian SecureCare each provide 100% cash indemnity benefits. Unlike reimbursement policies, cash indemnity policies do not require you to submit receipts to receive your benefits. Nationwide and Securian each pay 100% cash benefits to you, always.
For the purposes of keeping this price comparison simple, let's compare the New York Life Asset Flex pricing and benefits with currently the two best individual hybrid long term care insurance policies: Nationwide CareMatters II and Securian SecureCare.
For this policy comparison we will look at age 60 year old male and female pricing. Nationwide and Securian do not have health classifications. Everyone gets the same health classification with Nationwide and Securian.
We will examine the New York Life Asset Flex policy at its Preferred health classification Preferred Non-Tobacco. If the NY Life benefits do not compare well at its Preferred 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.
Rates updated as of July 30, 2020
|New York Life||Securian||Nationwide|
|Inflation||None||5% compound||5% compound|
|Age 60 benefit||$5631 mo.||$3488 mo.||$3695 mo.|
|Age 60 Total Pool||$405,462||$284,667||$301,567|
|Age 80 benefit||$5631 mo.||$9254 mo.||$9803 mo.|
|Age 80 Total Pool||$405,462||$755,306||$800,146|
|Age 85 benefit||$5631 mo.||$11,810 mo.||$12,511 mo.|
|Age 85 Total Pool||$405,462||$963,983||$1,021,212|
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 Securian and the Nationwide hybrid long term care insurance 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 Securian SecureCare and Nationwide Care Matters II policy benefits are particularly attractive due to the availability of the 5% compound inflation factor option within these policies for male applicants.
You will see that the Nationwide and the Securian LTC benefits will crossover and exceed the New York Life monthly LTC benefits at age 68. After age 68 the Nationwide and Securian benefits become increasingly more valuable with each passing year.
If you do want to design your plan inefficiently similar to the NY Life policy without inflation protection you will still do better - Nationwide will provide you with $6158 month (and it is 100% cash) as opposed to $5631 through NY Life.
We always take the long view however and build-in inflation growth to your benefits to maximize coverage for you when you are most likely to need long term care: ages 75-90.
Both Securian and Nationwide will offer the 60 year old male approximately $9,600 monthly LTC benefit at age 80 and between $750,000-$800,000 in total benefits. By age 85 the benefits will be $12,000 month and $1,000,000.
In contrast to these 2 policies, New York Life Asset Flex will offer you only $5631 month, and total benefits of $405,000.
Now let's look at the New York Life Asset Flex pricing for females.
|New York Life||Securian||Nationwide|
|Inflation protection||None||3% Compound||3% compound|
|Age 60 benefit||$4833 mo.||$4266 mo.||$4405 mo.|
|Age 60 Total Pool||$347,973||$331,125||$317,141|
|Age 80 benefit||$4833 mo.||$7705 mo.||$7955 mo.|
|Age 80 Total Pool||$347,973||$598,649||$617,508|
|Age 85 benefit||$4833 mo.||$8932 mo.||$9223 mo.|
|Age 85 Total Pool||$347,973||$693,303||$715,861|
You can see that we have an absolute catastrophe with NY Life for women.
New York Life is essentially selling to 60 year old women the exact same initial monthly LTC benefit that other companies are willing to inflate with an automatic annual 3% compounded growth factor for life. In 3 years at age 63, the Nationwide policy with the 3% compound factor will equate to the benefits NY Life is providing without any inflation.
By age 80-85 your Nationwide and Securian policies will provide twice as much monthly LTC benefits as NY life for the same premium outlay. And Nationwide and Securian are each 100% cash indemnity policies too.
This is an absolute rout!
NY Life is getting a free ride on your money if you are a female.
Without the inclusion of the automatic inflation factor, the New York Life Asset Flex benefits will provide only $4400 month in benefits at ages 80-85 whereas the Nationwide CareMatters II and the Securian SecureCare policies will provide you with $8000 to $9,000 month in long term care insurance benefits when you are likely to need care: age 80+.
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 5% compound 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, let's examine an initial monthly benefit of $3600 with 5% compound inflation protection. This is similar to the plan that Nationwide will sell to you for a single pay premium of $100,000.
New York Life will require $62,533 in premium in year 1; and subsequently in years 2-21 NY life will require ongoing annual premiums equaling an additional $158,094 in premium. Your total premium outlay with Asset Flex over 21 years to buy $3600 month with 5% compound inflation protection will be $220,627. And, to make matters worse your 5% compound inflation protection within the Asset Flex policy stops completely at age 81. Your inflation protection is capped.
So, where does all of this excess $120,627 premium go? Well, with Asset Flex your death benefit if you do not need any long term care will be $280,197 at age 86. With Nationwide and with Securian your death benefit will be $100,000.
So, for a 60 year old married male to include 5% compound inflation protection on an initial $3600 monthly benefit, NY Life is requiring you to pay an additional $120,627 in premium over 21 years, to possibly get an additional $180,000 in life insurance in your middle 80's, but if you need long term care your death benefit is offset, so your additional premium is at risk of not providing any benefit to you; and your inflation protection is capped at age 81. No more growth is given to you even after you have risked an additional $120,627 of premium. At age 85, NY Life will only provide you with $687,735 of long term care benefits. Nationwide, alternatively, will provide you with $1,021,212 in long term care benefits for only a $100,000 single premium.
To buy the Asset Flex policy with or without inflation protection is a non starter if you are 60 years old.
Here is the NY life illustration with inflation protection.
Anyone can see that you could simply self fund your own death benefit with the excess premium that NY Life wants you to pay, without incurring the risk that you would need long term care resulting in all of your excess NY Life premiums to be offset by your LTC claims.
|Premiums years 1-21||$100,000||$220,627|
|Age 80 LTC||$800,146||$654,986|
|Age 85 LTC||$1,021,212||$687,735|
|Age 85 Life Insurance||$100,000||$284,609|
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 one of the most attractive policies for couples, the OneAmerica Asset Care joint policy with Lifetime Unlimited 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 $7,500 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.
(Fidelity Investments also entered into a marketing agreement with New York Life in May 2020. Fidelity Investments is required to sell you either Mass Mutual CareChoice or New York Life Asset Flex, neither of which are competitive policy values)
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.
The above is an independent review of the NY Life Asset Flex 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 Nationwide CareMatters II, Lincoln Moneyguard III, Mutual of Omaha, Securian SecureCare, Mass Mutual CareChoice, OneAmerica/State Life, Pacific Life PremierCare Choice, Thrivent and more. Call us today for your customized illustrations. We are your "one stop shop!"