4 minute read
The 411 on Group Term to 120
By Bill Bade, FSA, MAAA
Life products have long been a key ingredient to successful worksite portfolios, particularly for established carriers partnering with enrollment firms that utilize first year commissions to support open enrollment. Some carriers offer Whole Life products, others offer Universal Life products, and a few offer both Universal Life and Whole Life solutions. These products have staying power, and our firm has seen a surge of product development recently to improve overall company persistency, introduce long term care riders, etc.
You should also be aware of a third life product option: Group Term to 120, sometimes also packaged with a shorter age duration as Group Term to 100.
Unlike annually renewable term, or term for a specified number of years (eg 10 Year Term or 20 Year Term), Group Term to 120 is designed to last an insured’s lifetime.
The structure of the product provides flexibility and advantages that include the following:
The base Group Term to 120 product can be filed on the insurance compact. Filing on the compact, as opposed to filing with each individual jurisdiction, provides access to approximately 45 jurisdictions in a single filing. Streamlining the filing process improves speed to market and reduces state variations in coverage. There are also some riders that can be filed alongside the base product on the compact, though other riders may need to be filed with the individual jurisdictions based on their specifics.
Group Term to 120 can be less expensive than traditional Universal Life and Whole Life options. Group Term to 120 is a flexible product that can be designed with current and guaranteed rates, cash values or no cash values, and / or riders of varying cost. This allows creation of a robust product with premiums that rival traditional Universal Life or Whole Life products, while at the same time allowing for more vanilla plans that cost far less. This flexibility is particularly important when selling across distribution channels.
Group Term to 120 is easier to administer than traditional Universal Life and Whole Life options. Group Term to 120 can be designed to functionally work more like a supplemental health product than a traditional Universal Life or Whole Life product. This affords carriers with an opportunity to improve billing and simplify the claims process, thereby also improving employer as well as consumer satisfaction.
Group Term to 120 provides a chassis for important rider coverage. Like other life products, Group Term to 120 can be packaged with additional benefits such as, acceleration of death benefit due to terminal illness, chronic illness, or confinement in a long term care facility. Similarly, benefits for extension, restoration, waiver of premium, short term care, children’s term, etc., may also be included in the product design. Given the low volume of Group Term to 120 products in the marketplace, there is an opportunity for expansion and innovation of these additional benefits.
Group Term to 120 is optionally illustrated. While there may be marketing advantages associated with illustrating Group Term to 120, illustrations are not mandatory. To the extent the product can be successfully marketed without illustrations, administration can be further streamlined.
Group Term to 120 optionally provides cash values. Some carriers provide cash values on Group Term to 120 products and others do not. This flexibility allows carriers to enter the market at different price points and creates opportunities for unique product designs and strategies.
Group Term to 120 is one of the more dynamic and sought after products in the current supplemental benefits market. We hope this introduction to the product is helpful and encourages you to take a deeper look at this emerging product line!
Bill Bade, FSA, MAAA – Consultant - Bill founded Sydney Consulting Group with a strong desire to provide client-focused actuarial, compliance, and strategic support to carriers of all sizes in the supplemental benefits industry. Sydney Consulting Group’s product expertise includes, but is not limited to, Accident, Cancer, Critical Illness, Hospital Indemnity, Long / Short Term Disability, Term Life, Universal Life, and Whole Life.
