Novelty protection policy provides long-term peace of mind
vice president and head of marketing and product development
New York Life Insurance Worldwide Ltd
Photo: Lewis Wong
Shrewd market players can turn risk into opportunity by tapping into the needs of their clientele. With Hong Kong people changing their focus from investment products to traditional protection cover, one life insurance company has now launched a unique stand-alone critical illness protection plan.
"During the financial market boom over the past few years, Hong Kong people focused mainly on buying investment-linked products," says Diana Kwan, vice president and head of marketing and product development, New York Life Insurance Worldwide Ltd. "Today, people seek more to understand the importance of basic protection, comprising life, critical illness and hospital insurance products."
Ms Kwan notes that sensible wealth management should prioritise basic protection, with investment products only as the last consideration. She says, "Last year, 60 to 70 per cent of policyholders invested in mutual funds. This year, almost 60 per cent of them have shifted to traditional life-insurance products."
To meet the growing market demand, New York Life launched a unique Supreme Care Critical Illness Protector — the first stand-alone critical illness product in the market allowing policyholders to pay premiums for only eight years.
"Similar products require policyholders to pay premiums up until they are 70 or 80 years old. However, we believe it's more sensible for policyholders to pay their premiums while they are still working and receiving a regular income. This rids them of the financial burden after retirement," Ms Kwan explains.
Government statistics show that life expectancy for Hong Kong men and women will increase from 79.5 and 85.6 years in 2006 to 82.7 and 88.3 respectively by 2036. "People are now living longer, with a corresponding higher risk of developing serious illnesses," points out Ms Kwan. "People without sufficient insurance coverage may face a heavy financial burden from medical fees."
The new product offers protection up to the age of 100, while offering policyholders the option to finish their premium payments within eight, 12 or 18 years.
Many critical illness products cease protection when policyholders stop paying premiums, sometimes because of financial difficulties. A key feature of the Supreme Care Critical Illness Protector is that it offers financial flexibility for policyholders in need of emergency cash.
"Should policyholders surrender the policy after eight years of paying premiums, they may claim a guaranteed surrender value of 50 to 100 per cent of the premiums, or up to 100 per cent of the face amount at that point," she notes.
Policyholders can also expect payments of up to 150 per cent of the policy's latest face amount if they are diagnosed with an illness covered by the policy. In the event of the insured person's death, the amount is payable to a beneficiary, even if the cause of death was not one of the critical illnesses covered. The maturity payment equals 150 per cent of the latest face amount.
The plan covers up to 52 critical illnesses, one of the highest numbers to be covered by any insurance policy. Ms Kwan believes most new products this year will focus on basic protection with fit-for-market features incorporated.
She also feels there are still opportunities for insurance companies, regardless of the dire state of global financial markets.
New York Life Insurance currently employs 1,100 financial consultants and plans to increase this number to 1,700 by 2011. The company plans to hold large quarterly recruitment days and run regular team-based recruitment activities. "People who lose their jobs are potential business starters, but by joining an insurance company they can minimise the financial risk to themselves while taking 'ownership' of the business," she notes.
Ms Kwan stresses that the company is set apart by its financial strength. Its US parent company, New York Life Insurance Company, has the highest possible financial strength ratings from all four major credit-rating agencies. "This allows long-term research support to our financial consultants, which is fundamental to our business," she stresses.
The company has an in-house training facility, the NYLIC University Online Campus, and has also incorporated its parent company's General Office Leadership and Development (GOLD) system as part of its agency management.
The GOLD system ensures that best practices are applied universally and that communication methodologies are standardised throughout the company. "Our consultants get clear guidance regarding every process, including recruiting, selling and training, and even their telephone techniques. This increases sales revenues and productivity," Ms Kwan concludes.
Make the right moves
- Market is shifting from investment products to traditional protection policies
- New critical illness protection plan taps into current market needs
- Plan provides for policy premiums to be paid over a minimum of eight years
- Financial strength and people development system set company apart