As a part of its broader mission to offer consumer-driven and innovative insurance products and services, Allstate is introducing Monthly Income Term, a new life insurance policy that pays out like a monthly paycheck should a loved one pass away. The new product is available now, subject to state availability.
Monthly Income Term, the company said in a Sept. 26 press release announcing the product, “was designed to be simple to understand and will help people think differently about life insurance. Instead of a lump sum payment found in most standard life insurance policies, a monthly benefit makes it easier for families on a budget to protect their families and standard of living.”
With Monthly Income Term, customers can work with their agent to immediately visualize how term length, benefit period and death benefit amount impacts price thanks to a new, interactive digital slider tool provided by Allstate.
“Our industry must do a better job with helping consumers better understand and navigate their insurance options,” said Mary Jane Fortin, president of Allstate Financial Businesses. “Monthly Income Term is a big step forward to help provide financial security in a very simple way, especially for families who are balancing so many competing priorities.”
While some critics point to the scrutiny a few years back of insurers placing death benefits in “retained asset accounts” and benefitting from the interest earned in keeping the lump sum, or liken it to “gimmick marketing.” Allstate says the design of the product was driven by consumers, who have expressed that financial protection which acts like a monthly paycheck helps them better understand and determine how much coverage their families will need should the worst occur. This new form of financial protection helps replace the income families depend on so they can continue paying for everyday expenses like housing, groceries, car payments and kids’ activities. It also provides a one-time $10,000 payment to help with any other immediate expenses following the passing of a loved one.
Beneficiaries who prefer to take the death benefit in the form of a lump sum can convert the monthly payment stream into a one-time payment.
Monthly Income Term is offered for issue ages 18-65, and coverage will expire at age 71, according to an actuarial memorandum describing the new product. Monthly Income Term has a minimum death benefit of $2,000 per month, and a related rider has a minimum death benefit of $5,000.
“Last year, Allstate paid out over $950 million in benefits to more than 11,000 families. Yet, too many people put off purchasing life insurance – when they can’t afford to,” said Fortin. “Purchasing a life insurance policy is a true act of love that protects what matters most.”
Allstate Monthly Income Term is a term life insurance policy issued by Allstate Assurance Company, 3075 Sanders Rd., Northbrook IL 60062 and is available in most states with contract series ICC18AC11/NC18AC11 and rider series ICC18AC12/NC18AC12. Policy issuance is subject to availability and qualifications. This policy has exclusions, limitation and terms that may affect coverage, renewal, cancellation, termination, or other contractual rights and benefits. Guarantees offered are subject to the claims-paying ability of the issuing company. Not available in New York. For more information visit http://www.allstate.com
Lol. Instead of teaching their agents how to do a better job… they change the product.
There will definitely be some E&O claims if Allstate replaces existing policies that would have provided more freedom to the beneficiaries. Funny (not funny) part is that this can pretty much be done by utilizing the Payout Annuity tables for those beneficiaries that wish to have an income for X years or their lifetime. Now, with this product, they will be stuck with the income stream unless they commute the value & that math tends to not be real good for the person selling their income stream for a lump sum.
Keep in mind, Allstate owns E-surance, so this may not be as much of an issue of training it's agents as it may be more of a play to sell direct to consumer without having to compete price wise as there will be no easy way to compare to competitors 10,20, or 30 year term policies
I actually see this as possibly being a trend for a certain market of consumers. I have met people over the years who are against buying life insurance because they dont want to make their spouse rich, they dont want to make their children rich, or they have experienced love ones fighting over money of a deceased parent.
If they see it as a check to replace a check the household loss I believe there mightbe some folks, not much more but some more folks who might be interested in buying a policy.
I tend to agree with that concept(a lot like how DI & LTC work), but many carriers already offer riders you can place on a policy to customize the payout. X % as a lump sum & the balance of the face amount spread out over X,Y or Z years that you customize at time of issue. The smaller the lump sum & longer the balance is spread out, the lower the premium for the face or the more face you can get for same premium commitment.
But, my concern is this type of product only serves the income need, it doesn't address all the other needs that a lump sum can take care of. So, I see a client still needing lump sum coverage policy & a monthly income policy if they go that route.
Protective's IPO can do this.
Oh yeah I definitely imagined this as being marketed like an income protection product like how DI is marketed.
Sure there may be companies where you can take the proceeds, throw it into an annuity, and create an income stream but I would have to explain that to the client. Whereas Allstate is marketing upfront off the bat like "Hey, get a monthly check in case of death of a provider."
I know some people will believe a policy like that would definitely pay out vs. if I told them your husband dies and we will give you a check for a million dollars. Some folks get skeptical. Also for some its more palatable to hear they or a loved one will get a monthly check vs. a check for a million dollars.
I agree though that if a famlily has a mortgage for example, a lump sum policy is the way to go. This is not for everyone or every situation
Your thinking logical and economical. There are many buyers that dont think like that. Thats why they are so many underinsured folks and I imagine it would remain that way no matter how many intelligen agent/advisors there are.
Why do you think so many folks win the lotto and go broke?
And buying on price isn't logical and economical?
The problem is that most people get into "windfall" thinking, as though it's "raining money" (and that their beneficiaries would be happier without them).
So, they don't want that feeling, so they get a policy that "feels good" to them and is cheap enough to say "I did a good job"… even if it's less than half of what they should be doing.
Exactly. As can Minnesota Life & AIG I believe. The rider can do both lump sum & income.