Life Solutions – Niche Product Opportunities

Since the days of Life Insurance Awareness Month are waning, we would like to take the opportunity to share some niche products found in the specialty markets that may provide you with opportunities to find solutions to your cases that have been languishing or seem dead on arrival.

Since the onset of the COVID-19 pandemic, there has been a great influx of cases coming onto the market where traditional life products aren’t an available fit.  Older age clients and prospects with impaired health histories or hazardous risk backgrounds are finding little to any help from many U.S. carriers.  Coverage postponements have become more common at this time, and the need for outside-the-box, shorter-term solutions is quite evident.

One such accommodation is a simple financial protection vehicle that is often scoffed at by life insurance purveyors, but can sometimes be the best solution for hard-to-place cases.  I’m talking about standalone accidental death insurance.  Of course the product doesn’t provide comprehensive protection and shouldn’t be prescribed in lieu of traditional term or whole life insurances, but when client demographics don’t fit a traditional mold or when supplemental short term coverage is necessary, accidental death is an affordable alternative that often saves the day.

AD policies are simplified-issue and can be underwritten and approved in a few days, providing much needed death benefits to clients with health problems or clients living abroad or clients with hazardous avocations like auto racing or private piloting.  The reasons to look to a high-limit accidental death policy are numerous, and we are constantly seeing this flexible product being the agent’s perfect tool at the right time.

Another niche solution for the life market that has taken the industry by storm is failure to survive insurance also known as contract protection insurance.  The basic product is similar in format to term insurance for third-party applications.  Its main purpose is to address key person, buy/sell, contract guarantee and business loan situations where there is a financial obligation to indemnify a business contract upon the death of an individual (usually the business owner or a key employee) with insurance.  It cannot be used as an alternative to personal-benefit life insurance, but is commonly employed to cover divorce decrees and alimony/child support court orders.

Medically sub-standard cases find easy solutions amongst the product line as the underwriting guidelines are more flexible than those of traditional life carriers, allowing for medical exclusions and coverage for persons with infirmities like cardiac, body mass and diabetes issues.  It’s also optimal for prospects with drug, alcohol and mental health concerns.

What make failure to survive insurance stand apart is that it can be underwritten quickly.  The average turnaround time from receipt of application to the approval of coverage is usually no more than several business days.  Underwriters offer simplified issuance of the coverage without requirements like intrusive medical exams, blood draws and urinalyses.

The fast underwriting period allows policy owners to meet the strict and time-sensitive deadlines mandated by lending institutions on loan agreements.  Failure to survive can also be extremely useful when the underwriting of a traditional term product is holding-up a business deal relying upon the insurance for a corporate buy/sell or investment agreement.

Although traditional life insurance is generally preferred, it is not always available to every client in every circumstance.  Niche products like accidental death and failure to survive have garnered huge followings in recent years because the products often afford opportunities that traditional life carriers have denied or cannot accommodate.