Effective 2015: TransACE Products were removed from new sales by Transamerica
Yesterday, Transamerica released the details of their new 2013 version of their guaranteed universal life produce known as the TransACE.
This policy offers multiple benefits and potential uses for its policyholders, including:
- Return of Premium (multiflex surrender enhancement)
- and Long Term Care benefits
Read on for the details…
First of all, I should review the new pricing of the policy. As I have already discussed on this blog, recently, due to many changes in the reserve requirements for life insurance companies, just about every life insurance carrier has removed their guaranteed universal life product from the market or is now introducing a new variation of the old product or new pricing for the old product.
This is Transamerica’s new variation and new pricing of their 2012 version of the TransACE.
For a 50-year-old male in excellent health, in 2012, he could have purchased $100,000 for $1042. In the new 2013 version, however, the premium increases about 20%.
The new premium for a 50-year-old would be $1248 for the same amount of coverage. Other than the price increase though, this policy has many other features I would like to discuss.
Guaranteed Level Premiums and Level Death Benefit Probably the most important benefit to this policy is that the guarantees are still in affect with the ACE rider.
ACE stands for assured coverage endorsement and this is essentially a no lapse guarantee endorsement that states even though this is a cash value policy, even if there is zero cash value or not enough cash value to sustain the cost of insurance, the policy’s premiums and death benefit will still stay level as long as you pay your premiums on time when they are due.
Multiflex Surrender Enhancement Endorsement (Return of Premium!)
This is a rather unique benefit in the universal life world where Transamerica offers you a buyout amount after years 15, 20, and 25. Typically, this will be the total sum of premiums you have paid into the policy for the lifetime of the policy. This is the ONLY universal life policy I’ve ever seen that offers any sort of return of premium feature.
One popular life insurance policy that offers return of premium is the Lincoln Moneyguard, but it’s a SINGLE PREMIUM policy, meaning you have to pay in one large lump sum. To clarify, the TransAce can be paid monthly or annually like any other policy and you can still qualify for the multiflex surrender option.
In other words, if you have been paying into the policy for 20 years and, due to life changes, perhaps you no longer need or can afford the policy at the end of year 20, you may be able to get 100% of your premiums back through the surrender enhancement endorsement. Of course, that would mean your policy would be surrendered or lapsed and no death benefit would be payable if you were to take that surrender option and take the cash payout.
Income Protection Option
This benefit can be used for insured’s up to age 33 and it allows them to purchase additional coverage at certain policy anniversaries without proof of insurability. For example, let’s say you are 25 years old and buy a $100,000 policy.
A few years later, you decide you need another $50,000 of coverage. You can do that without proving that you are still healthy or succumbing to the insurance company’s medical examination requirements when they first underwrote your policy. The real benefit in doing this is, if you have a child or get married, it is nice to be able to add on additional coverage whether you are still healthy or not.
The downfall to this rider is that the maximum amount you can add on is $50,000. One of the neat things that they do is not only offer you certain policy dates when you can add on the additional coverage but also allow you to add additional coverage on important life events such as the date of your marriage or the date of birth when you have a child or adopt a child.
The child rider allows you to pay one additional amount to cover all of your children between ages of 15 days old and 25 years old. For example, if a 50-year-old male pays the base rate of $1248 per year for a $100,000 policy, he could add on a child rider of up to $99,000 per child for $347, making the total annual premium $1595.
What is nice about this rider is whether you have two children or ten children; the price of the rider does not change so it can make a lot of sense if you do have several children but probably starts to make sense once you have three children or more. For example, you could purchase a separate policy on three young children between the ages of 5 and 15 for around $300 to $350 per month that would also do the same thing.
They could be 10, 15, or 20-year term policies covering them to age 25. If you have three children, it might be a wash and, if you have more than three children, it makes a whole lot of sense to add the child rider. What is unique about this child rider is the fact that you can purchase up to $99,000 of coverage on each child whereas most other policies only offer between $5000 and $20,000.
Accidental Death Benefit
You can also add, for about 8% more, an additional $100,000 of accident death benefit coverage to your base policy. In other words, the 50-year-old male who purchased his $100,000 policy for $1248 could double the amount of coverage to $200,000 total death benefit for just $1351 per year and the full $200,000 would pay out in the event that he were to die from an accidental death. Of course, that money would not be payable if he were to die for medical reason.
Long-Term Care Benefit
This policy also has long-term care rider, which allows you to accelerate your death benefit and receive up to 2% of your total face value per month to pay for qualified long-term care expenses such as in-home care, adult daycare, or care in a long-term care facility. I have spoken in the past about other policies such as Prudential and North American policies, which offer a similar accelerated death benefit for free.
The difference here is this is a paid long-term care rider and that is because it offers a better benefit. The Prudential and North American riders both mandate that in order to receive the early benefit for qualified long-term care expenses, you have to be permanently confined to a nursing home and expected to stay there for the rest of your life or, in the case of North American, you don’t have to be permanently confined to a nursing home and you could receive benefits at home but you have to have a letter from a doctor stating that you are reasonably expected to always need care services for the rest of your life.
We know that is quite restricting so it would be nice if you have a long-term care need that may not require long-term care services for the rest of your life to be able to still receive early benefits and this policy does not require a permanent confinement to a nursing home or permanent type of disability to get the benefits so you are much more likely to be able to use this policy benefit.
What happens is, if you do use the benefit, again which is 2% of the face value per month, your death benefit is reduced by that amount until the entire face value has been reduced to zero. You could take out, for example, $2000 per month for approximately 50 months of long-term care expenses until that benefit has reached its maximum at which point your policy would switch to a reduced paid up policy for either $10,000 or 10% of the lowest amount that the face value ever reached.
In our example above, even if our 50-year old who had a $100,000 policy took out $100,000 of long-term care benefits, he would still end up with a $10,000 paid up policy for the rest of his life for life insurance purposes. The paid up status means he would no longer have to make premium payments even if he has exhausted all of the long-term care benefits.
That is the basic rundown of the new Transamerica policy. I will be posting more details about other guaranteed universal life products as they post their new rates and any new changes to their policies in the near future. As always, if you have any questions or need a quote, please call us at 877-443-9467.*While we make every effort to keep our site updated, please be aware that "timely" information on this page, such as quote estimates, or pertinent details about companies, may only be accurate as of its last edit day. Huntley Wealth & Insurance Services and its representatives do not give legal or tax advice. Please consult your own legal or tax adviser.