Critical care riders transform life insurance from a product that only pays out when someone passes away into a policy with living benefits that protect the insured during their lifetime.
“If the insured survives a major medical event, such as a stroke or cancer, a critical care rider can provide a portion of their death benefit to help cover immediate expenses,” said Jake Tamarkin, co-founder and president at Everyday Life Insurance
This cash can be used entirely at their discretion. Essentially, it protects the client’s broader financial plan and savings from being wiped out by a serious medical condition.
Industry data tracked by LIMRA shows that traditional individual critical illness in-force premiums sit in the billions, with newer combination policies (like life insurance bundled with critical or chronic care riders) seeing a 21% premium increase year-over-year in recent industry reporting.
“Critical riders support and care for the insured, and may lift incredible financial burdens when they’re faced with critical illness, disability and mortality,” explained Josh Anderson, president and CEO of Eagle Legacy & Financial.
Common misconceptions about these products
The most common myth is that health and disability insurance make these critical care riders unnecessary or redundant. In reality, those policies rarely cover deductibles or non-medical living expenses.
Also, many individuals mistake a critical care rider for a terminal illness rider and believe that one must be terminally ill to collect. This is simply not true.
Additionally, some believe the payout is “free money” rather than an early payout that reduces the death benefit.
Lastly, critical care riders aren’t only for those with limited funds.
Even if someone has substantial financial resources, a critical rider could offset their medical costs and help preserve the nest egg they’ve worked so hard to build.
When they make sense
The best candidates for critical riders are clients whose livelihoods would be halted during a medical crisis.
This includes self-employed individuals and small business owners who lack paid sick leave or group disability benefits. Professionals with young families and high expenses fit the bill as well.
“For these clients, the rider acts as an essential safety net to protect their lifestyle and keep their goals on track,” Tamarkin explained.
According to Anderson, a significant tax-free benefit could open the doors to advanced treatments that extend their lifespan. It could also allow them to support or even spend additional quality time with loved ones.
The advisor role
Critical care riders and accelerated death benefits can add cost to a policy. However, in many cases, some form of a critical care rider is built into a life insurance plan, and individuals can choose to pay an additional fee for more comprehensive coverage.
Once an advisor determines a client might be a good fit for a critical care rider, Tamarkin recommends comparing its cost to the cost of standalone critical illness policies, which are significantly more expensive.
Then, weigh the rider’s marginal cost against the high chance of a client surviving a major illness before retirement.
“Finally, contrast the small premium with the major financial setbacks that can occur after a medical event,” Tamarkin explained.
If possible, tell a personal story or share an example that could be eye-opening for the client and truly convey the value of a critical care rider.
It’s also essential to read the fine print and clearly explain that exercising the rider reduces the benefit left to beneficiaries.
“Many advisors gloss over the survival period, or assume every medical condition,” Tamarkin said.
To avoid mistakes like these, frame the benefit as an early partial payout of the death benefit, rather than an addition to it. Set realistic expectations by reviewing the policy’s named qualifying illnesses and waiting periods at policy delivery.
Shares of Globe Life Inc. (NYSE: GL) traded at a new 52-week high today and are currently trading at $183.65. So far today, approximately 106.34k shares have been exchanged, as compared to an average 30-day volume of 690.98k shares.
Globe Life Inc. delivers diverse life insurance and supplementary health coverage, alongside annuity products, targeting households in the lower-middle to middle-income brackets throughout the United States. The company’s operations are structured into four key segments: Life Insurance, Supplemental Health Insurance, Annuities, and Investments. Its offerings encompass whole life, term life, and other life protection plans and supplemental health benefits like Medicare supplements.
Globe Life Inc. share prices have moved between a 52-week high of $184.28 and a 52-week low of $119.16. The stock has moved 1.33% over the past week.
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OLDWICK, N.J.–(BUSINESS WIRE)– AM Best has upgraded the Financial Strength Rating (FSR) to A (Excellent) from A- (Excellent) and the Long-Term Issuer Credit Ratings (Long-Term ICRs) to “a” (Excellent) from “a-” (Excellent) of most of the subsidiaries of Sagicor Financial Company Ltd. (Bermuda). These subsidiaries — Sagicor Life Inc. and Sagicor General Insurance Inc. (both domiciled in St. Michael, Barbados), Sagicor Life Insurance Company (Austin, TX) and ivari (Toronto, Canada) — collectively are referred to as Sagicor Financial by AM Best and representthe organization’s Canadian, United States and a portion of the Caribbean operating companies. In addition, AM Best has upgraded the Long-Term ICR to “bbb” (Good) from “bbb-” (Good) and the Long-Term Issue Credit Rating (Long-Term IR) to “bbb+” (Good) from “bbb” (Good) of the $550 million, 5.3% senior unsecured notes, due 2028, of Sagicor Financial Company Ltd., the ultimate parent. Concurrently, AM Best has affirmed the FSR of A- (Excellent) and the Long-Term ICR of “a-” (Excellent) of Sagicor Reinsurance Bermuda Ltd. (SRBL) (Bermuda), as well as the FSR of B++ (Good) and the Long-Term ICR of “bbb+” (Good) of Sagicor Life Jamaica Limited (SLJ) (Kingston, Jamaica). The outlook of these Credit Ratings (ratings) is stable.
The ratings reflect Sagicor Financial’s balance sheet strength, which AM Best assesses as very strong, as well as its strong operating performance, neutral business profile and appropriate enterprise risk management (ERM).
AM Best views Sagicor Financial’s consolidated risk-adjusted capitalization as strongest, as measured by Best’s Capital Adequacy Ratio (BCAR), supported by diversified operational earnings from multiple subsidiaries. Financial flexibility is demonstrated via multiple debt issuances as well as a revolving credit line. Financial leverage and debt service coverage metrics support Sagicor Financial’s current ratings. Liquidity is adequate and in line with peers. The investment portfolio is conservative with a majority allocation to government and corporate bonds, alongside equity and commercial mortgage loans positions.
Sagicor Financial’s strong operating performance is driven by a track record of consistently positive earnings spread over multiple subsidiaries and geographic areas including Canada, United States and the Caribbean. Premium growth has been steady with continued new business recorded at the consolidated level. Investment performance has also been strong with net yields that outperform peers. Overall volatility has slowly been decreasing driven by a more conservative investment portfolio and a larger asset base.
Sagicor Financial’s neutral business profile reflects very strong market presences in the Caribbean and Canadian markets, as well as a captive agency force, which maintains strong business growth in multiple Caribbean territories. Sagicor Financial utilizes a large set of independent agents and independent marketing organizations in Canada and the United States. Offsetting these strengths is an elevated level of country risk which stems from Caribbean operations. ERM framework is appropriate for size and scale of the organization’s operations and includes proper subsidiary oversight and consistency in risk mitigation activities.
In addition to the consolidated ratings at Sagicor Financial, two additional entities are rated for the Bermuda and Jamaica operations. The ratings of SRBL reflect its balance sheet strength, which AM Best assesses as strong, as well as its adequate operating performance, limited business profile and appropriate ERM. SRBL optimizes group-wide capital and its ratings benefit from a capital maintenance agreement with Sagicor Financial Company Ltd.
The ratings of SLJ reflect its balance sheet strength, which AM Best assesses as strong, as well as its strong operating performance, neutral business profile and appropriate ERM. SLJ has a very strong market position in Jamaica and a consistent history of revenue and earnings, which has led to balance sheet growth. Offsetting rating factors include an elevated country risk level in Jamaica.
This press release relates to Credit Ratings that have been published on AM Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best’s Credit Ratings. For information on the proper use of Best’s Credit Ratings, Best’s Performance Assessments, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.
AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.
Life insurance is often framed in terms of products, premiums and long-term financial planning. Yet its true test comes much later, at a moment that no one anticipates or welcomes. A life insurance claim is filed only after a life has ended, when beneficiaries may be grieving, overwhelmed and unsure of what comes next. This is when human involvement matters most.
Enrique Monzon
At this critical time, the industry is no longer predicting risk or managing probabilities; it is fulfilling a promise. As artificial intelligence increasingly shapes life insurance operations, the industry faces a critical challenge: how to preserve human experience at the exact moment when it matters most.
AI is already transforming life insurance in meaningful ways. Automated document review, data validation and analytics have reduced processing times and improved consistency. For beneficiaries, these advances can translate into faster payments and fewer administrative burdens during an already challenging and stressful time. For insurance companies, AI offers scalability, cost control and improved operational discipline. These are real gains, and they should not be understated.
But life insurance claims are not merely operational events to be optimized. They are defining moments of trust and opportunities for our industry to make a lasting impact.
A beneficiary does not experience a claim decision as a system output or model recommendation. They experience it as a final judgment — one that may shape their financial stability and emotional recovery. In this context, speed without care and accuracy without accountability are not enough.
Life insurance claims examiners operate at the intersection of contract and real-life complexity. Policy language may be fixed, but claim circumstances rarely are. Documentation can be incomplete, timelines unclear and situations emotionally charged due to the loss of a parent, partner or child.
Accountability must remain firmly human
Although AI can surface information, identify patterns and support increasingly sophisticated analysis, accountability for claim outcomes must remain firmly human. A beneficiary’s experience is ultimately shaped not by what a model recommends, but by who stands behind the decision. Human judgment remains critical to ensuring that decisions are not only technically sound but also communicated with empathy, clarity and care. In moments of loss, responsibility cannot be delegated to an algorithm.
Trust in life insurance depends on accountability. Someone must stand behind every decision. Maintaining clear human ownership for claim outcomes is essential to preserving credibility and confidence.
The impact of AI in claims is not predetermined; it is shaped by how organizations design and govern its use. When deployed thoughtfully, AI can elevate the role of the claims examiner by removing repetitive tasks and creating more space for complex adjudication, communication and judgment. When poorly designed, however, AI can encourage overreliance on automated recommendations, weakening the very human accountability that beneficiaries depend upon during difficult moments.
What’s the best way to deploy AI?
For industry leaders, the conversation should not center on whether AI belongs in life insurance claims. That question has already been answered. The more important question is how best to deploy AI.
Is it positioned as decision support or as a silent decision-maker? Are there clear thresholds where human review is required? These are not technology questions alone; they are leadership decisions that shape the beneficiary experience. Effective governance requires defining where human involvement is mandatory, how exceptions and complex cases are escalated and who remains accountable for the outcome. Transparency in decision-making, clear oversight mechanisms and documented ownership of claim determinations will be essential to preserving trust as AI becomes more deeply embedded in claims operations.
Life insurance represents one of the longest-dated commitments a financial institution can make. The claims experience is the moment when that commitment is judged. AI has the potential to strengthen that moment by reducing friction and inconsistency. But it must be deployed in a way that reinforces, rather than replaces, human responsibility.
Preserving the human experience in AI-enabled life insurance claims is not about resisting innovation. The future of insurance will undoubtedly be more automated, more data-driven and more intelligent. But it must also remain compassionate, fair and human.
It is about recognizing that technology and humanity are not opposing forces. AI may accelerate decisions, improve consistency and strengthen operational effectiveness. But no matter how advanced technology becomes, responsibility for claim outcomes must remain human. In life insurance, the moment of truth is not defined by the system’s intelligence — it is defined by the accountability of the people entrusted to fulfill a promise when it matters most.
New enhancement could give clients more control over how long-term care benefits are used, reflecting real caregiving and financial needs
NEW YORK–(BUSINESS WIRE)–
New York Life announced the launch of an indemnity benefit payment option for Asset Flex, its hybrid long-term care (LTC) insurance solution combining long-term care and universal life insurance. The Asset Flex Indemnity feature offers greater flexibility in how benefits are delivered, expanding how clients address LTC needs within a broader financial strategy.
“We know that 70% of Americans turning 65 will need some form of LTC1, but LIMRA research finds only 3% over age 50 own any long-term care insurance2,” said Ruby Grace Reyes, corporate vice president and head of LTC Products at New York Life. “The introduction of indemnity benefits reflects our broader strategy of increasing access, supporting earlier planning conversations and helping to close the gap between the number of Americans who will need care and those who are financially prepared for it.”
Indemnity Benefit Reflects Realities of Care
Asset Flex continues to combine life insurance protection, LTC benefits, and return-of-premium features, reinforcing New York Life’s commitment to long-term financial security and protection. The addition of the indemnity option reflects the changing realities of LTC, where costs often include family caregiving support, transportation, home modifications and other needs that may not fit neatly within a reimbursement model.
How Asset Flex Indemnity Feature Works
With the addition of the indemnity benefit, Asset Flex now expands client choice by offering two distinct ways to access LTC benefits:
At application, clients can select a traditional reimbursement benefit, which covers qualified long-term care expenses up to the monthly maximum benefit amount upon claim eligibility.
Alternatively, they can choose the indemnity option, which provides a monthly cash benefit upon claim eligibility, regardless of actual expenses incurred.
In addition, Asset Flex includes features designed to provide greater flexibility when care needs evolve. Clients electing the indemnity option may benefit from extended international coverage for qualifying nursing home care outside the United States, as well as a zero-day waiting period for facility care when eligible home care services have already been received. These enhancements help support a broader range of caregiving situations and planning needs.
“By giving clients flexibility to choose the benefit structure that best aligns with their circumstances, Asset Flex is now designed to support a wide range of care needs while building on its position as a strong LTC planning solution,” continued Reyes. “Long-term care planning is deeply personal, and the way care is delivered doesn’t always follow a predictable path. We’re helping clients prepare for their caregiving needs on their terms, whether that means professional services, support from loved ones or a combination of both.”
Asset Flex is available in most states through New York Life financial professionals and other registered investment advisors. To learn more or connect with a New York Life financial professional, visit our website.
ABOUT NEW YORK LIFE
New York Life Insurance Company (www.newyorklife.com), a Fortune 100 company founded in 1845, is the largest3 mutual life insurance company in the United States and one of the largest life insurers in the world. Headquartered in New York City, New York Life’s family of companies offers life insurance, disability income insurance, retirement income, investments, and long-term care insurance. New York Life has the highest financial strength ratings currently awarded to any U.S. life insurer from all four of the major credit rating agencies.4
3 Based on revenue as reported by “Fortune 500 ranked within Industries, Insurance: Life, Health (Mutual),” Fortune magazine, 6/3/2026. For methodology, please see https://fortune.com/ranking/fortune500/#methodology.
4 Individual independent rating agency commentary as of 10/28/2025: A.M. Best (A++), Fitch (AAA), Moody’s Investors Service (Aa1), Standard & Poor’s (AA+).
HONG KONG–(BUSINESS WIRE)– AM Best has affirmed the Financial Strength Rating of A+ (Superior) and the Long-Term Issuer Credit Rating of “aa-” (Superior) of DB Insurance Co., Ltd. (DBI) (South Korea). The outlook of these Credit Ratings (ratings) is stable.
The ratings reflect DBI’s balance sheet strength, which AM Best assesses as very strong, as well as its strong operating performance, favourable business profile and appropriate enterprise risk management.
DBI’s risk-adjusted capitalisation is assessed at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR), including credit for hybrid securities. DBI’s strong capability of internal capital generation, financial flexibility and tight asset-liability management allows the company’s capital to stay resilient amid an unfavourable business environment, such as volatile interest rate movements. In AM Best’s view, the company had a positive adjusted financial leverage ratio of 11.9% at year-end 2025, which includes equity credit for hybrid securities, and strong interest coverage for 2025. While the acquisition of The Fortegra Group, Inc. (Fortegra), completed in May 2026, could potentially weigh on risk-adjusted capitalisation, AM Best views DBI as having a sufficient capital buffer to absorb the impact, and expects the company to recover through strong earnings generation.
AM Best assesses DBI’s operating performance as strong, underpinned by continued double-digit return-on-equity, supported by a combined ratio that generally outperforms its domestic peers and robust investment profits. AM Best expects the recent decrease in overall underwriting profitability to be manageable, following various mitigative measures in each business line including active rate adjustments and tightened underwriting discipline. In particular, the company’s large contractual service margin will continue to provide a stable source of underwriting income in the long-term insurance line. Prospectively, the acquisition of Fortegra is expected to provide a moderate uplift to DBI’s overall earnings.
DBI remains one of the leading non-life insurers in South Korea, with a market share of about 19% in terms of insurance service revenue in 2025. The company benefits from a strong brand in its domestic market and its diversified product offerings, including long-term, auto and general insurances. Its profile is strengthened further by the life insurance business through its subsidiary, DB Life Insurance Co., Ltd. In addition, the acquisition of Fortegra is expected to bring geographic and product diversification to DBI, bolstering its international growth strategy and supporting its long-term positioning in the U.S. market.
Negative rating actions could occur if DBI shows a sustained deterioration in its operating performance to a level that no longer supports the current strong assessment. Negative rating actions also could occur if there is a significant deterioration in the company’s balance sheet strength fundamentals. Although unlikely in the medium term, positive rating actions could occur if DBI demonstrates an unquestionable market leadership position with high brand recognition in both domestic and overseas markets, while maintaining strong profitability.
Ratings are communicated to rated entities prior to publication. Unless stated otherwise, the ratings were not amended subsequent to that communication.
This press release relates to Credit Ratings that have been published on AM Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best’s Credit Ratings. For information on the proper use of Best’s Credit Ratings, Best’s Performance Assessments, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.
AM Best is a global credit rating agency, news publisher and data analytics provider specialising in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.
HONG KONG–(BUSINESS WIRE)– AM Best has upgraded the Financial Strength Rating to A (Excellent) from A- (Excellent) and the Long-Term Issuer Credit Rating to “a” (Excellent) from “a-” (Excellent) of The People’s Insurance Company of China (Hong Kong), Limited (PICC HK) (Hong Kong). Concurrently, AM Best has revised the outlook of these Credit Ratings (ratings) to stable from positive.
The ratings reflect PICC HK’s balance sheet strength, which AM Best assesses as very strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management. The ratings also reflect the strategic importance of the company to its parent, The People’s Insurance Company (Group) of China Limited (PICC Group) (China).
The rating upgrades reflect sustained improvement in PICC HK’s business scale, evidenced by its enhanced market position and significant quality development in the inward reinsurance business. In 2025, PICC HK ranked 8th amongst primary non-life insurers in Hong Kong, with a market share of 3.8% in terms of onshore and offshore gross premiums written (GPW) according to the Hong Kong Insurance Authority statistics. Over the years, PICC HK has achieved sustained profitable growth in its inward reinsurance portfolio with global geographical diversification. Since 2025, PICC HK has strategically tapped into vast Chinese Interest Abroad (CIA) opportunities by leveraging its affiliated company, PICC Property & Casualty Company Limited (PICC P&C), achieving a double-digit top-line growth. Prospectively, the company plans to continue expanding its inward reinsurance portfolio, with a growing focus on CIA businesses. AM Best expects PICC HK to prudently execute its business plan while maintaining its underwriting discipline.
PICC HK’s risk-adjusted capitalisation, as measured by Best’s Capital Adequacy Ratio (BCAR), remained at the strongest level at year-end 2025. The company’s investment portfolio remains well-diversified, dominated by investment-grade bonds, cash and cash equivalents and equities. It also maintains a healthy regulatory solvency position and strong liquidity levels. PICC HK’s operating performance remains adequate. Its positive bottom line is largely supported by investment income, while underwriting results are close to breakeven.
As the group’s sole overseas insurance entity, PICC HK continues to be of strategic importance to the PICC Group. PICC HK plays a key role in expanding the group’s overseas strategies, and benefits from its parent’s explicit and implicit support. The company also has benefited from the group’s operational synergies, particularly in the areas of business development, key management personnel and overall risk management.
Positive rating actions could occur if PICC HK demonstrates sustained and favourable results to strengthen its overall operating performance. Negative rating actions could occur if there is a decline in PICC HK’s operating performance to a level that no longer supports AM Best’s adequate operating performance assessment. Although unlikely in the intermediate term, negative rating actions could also occur if the support PICC HK receives from PICC Group weakens notably or the parent’s credit fundamentals deteriorate materially.
Ratings are communicated to rated entities prior to publication. Unless stated otherwise, the ratings were not amended subsequent to that communication.
This press release relates to Credit Ratings that have been published on AM Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best’s Credit Ratings. For information on the proper use of Best’s Credit Ratings, Best’s Performance Assessments, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.
AM Best is a global credit rating agency, news publisher and data analytics provider specialising in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.
OLDWICK, N.J.–(BUSINESS WIRE)– AM Best has launched a new subscription for the Best’s Capital Adequacy Ratio (BCAR) Model product, offering access to a capital model for life insurers.
“We are excited to expand the BCAR Model product line,” said Adriana Franco, vice president of product strategy at AM Best. “This new subscription option helps customers assess risk-adjusted capitalization levels under changing conditions for life insurance companies.
“Best’s Capital Adequacy Ratio Model – Life, US joins Best’s Capital Adequacy Ratio Model – P/C, US as part of our recently launched online platform. We also offer Best’s Capital Adequacy Ratio Model – Global, which is designed for the international market,” said Franco.
Best’s Capital Adequacy Ratio depicts the quantitative relationship between an insurer’s balance sheet and its operating risks. The BCAR Model products let you evaluate an insurer’s capitalization and risk profile using a model consistent with the methodology used by AM Best analysts, capturing the combined impact of financial risks associated with adverse market conditions.
AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.
SAN ANTONIO–(BUSINESS WIRE)– SWBC is proud to announce that Joan Cleveland, President and CEO of SWBC Life Insurance Company and Executive Vice President of SWBC Property and Casualty Insurance Company, has been reappointed to the Texas Association of Life & Health Insurers (TALHI) Board of Directors. TALHI represents life and health insurers across Texas and advocates for economic, legislative, and regulatory policies that support access to insurance and financial products for Texas consumers.
Joan Cleveland, President and CEO of SWBC Life Insurance Company and Executive Vice President of SWBC Property and Casualty Insurance Company
TALHI reports that life insurers support more than 295,000 jobs across Texas and have invested more than $710 billion in Texas businesses, infrastructure, housing, agriculture, and local communities, highlighting the industry’s significant role in the state’s economy and financial well-being.
“It is an honor to continue serving on the TALHI Board of Directors and supporting the important work the association does on behalf of Texas policyholders,” said Joan Cleveland, President and CEO of SWBC Life Insurance Company and Executive Vice President of SWBC Property and Casualty Insurance Company. “I look forward to collaborating with my fellow board members to address the issues facing our industry and to support Texas families and communities.”
With more than 35 years of experience in the life and health insurance industry and over 10 years of prior service on the TALHI Board, Cleveland brings deep industry knowledge and leadership to her reappointment. At SWBC, she oversees the company’s payment protection insurance operations and strategic direction, helping drive continued growth and success.
In addition to serving on the TALHI Board and the association’s Finance Committee, Cleveland was recently appointed to the Texas Life and Health Insurance Guaranty Association (TLHIGA) Board of Directors, where she will continue to serve through September 30, 2031.
About SWBC
As a diversified financial services company, SWBC provides financial institutions, businesses, and individuals with a wide range of insurance, mortgages, wealth management, employee benefits, and more. Headquartered in San Antonio, Texas, SWBC has partners and divisions across all 50 states and Mexico and manages businesses worldwide. No matter how wide its reach, SWBC always listens to our customers’ needs, analyzes their current situations, and recommends customized solutions. For more information about our innovative approach to personalized service, visit SWBC’s website.
There is a way of looking at premium-financed indexed universal life that makes it look like a bad deal. And there is a way of looking at it that makes its value almost impossible to ignore. The difference between those two views is not just the data. It is the lens.
Michael Rothman
The lens you use when looking at premium financing matters enormously, both when working with clients and when reading media coverage about the strategy. When the goal is to generate traction rather than to illuminate, a premium-financed IUL is evaluated as a standalone financial instrument. At the same time, the value of the death benefit and the planning context are entirely set aside. Through that lens, critics look at the loan rate, the illustration, the projected cash value, the interest cost and ask: Is this a good investment?
Kristin Williams
From that vantage point, it is easy to construct a case against almost any policy. Pick unfavorable assumptions. Ignore the value of the death benefit. Set aside the estate and business planning context. Compare the cash value against a hypothetical alternative investment without insurance and call it a disaster. That analysis asks the wrong questions and ignores critical facts and circumstances.
The right question, with the right context, changes everything. With the wrong lens and no context, a premium-financed structure may look like a bad deal. With the right lens and proper context, it is often the best solution for a client’s generational planning.
What the math shows
Here is a framework I have used with advisors for years, because the numbers tell a story that the product-focused critics never address.
Suppose a client has a taxable estate of $100 million today. They do no planning and leave it to their children, who then leave it to their grandchildren, who then leave it to their great-grandchildren. At each generational transfer, the estate is subject to the federal estate tax. At current rates, 40% of the estate above the tax exemption is paid to the IRS.
If that $100 million grows at 4% annually over three generations, in isolation, it would grow to approximately $5 billion over 100 years. But because it gets taxed at each transfer, the compound effect of those three estate tax hits is devastating. Run the numbers. The great-grandchildren receive somewhere in the range of $1.5 billion. The family lost $3.5 billion, not to bad investments or bad decisions, but to the predictable and avoidable consequence of a 40% tax drag. And most clients and advisors ignore his inevitability.
Now introduce a dynasty trust. This is a trust structured specifically to allow assets to pass through multiple generations without triggering the estate tax at each transfer. Federal law allows a couple to place up to approximately $30 million into a dynasty trust. Once assets are inside, they grow free of estate tax through each generational transfer.
Here is where life insurance becomes the most powerful tool in that structure.
If the client takes $10 million from their estate, gifts it to the dynasty trust, and uses it to purchase $100 million of income-tax-free life insurance, the dynamics shift dramatically. The policy proceeds, all $100 million, grow inside the trust. They compound without estate tax exposure. They transfer without estate tax exposure. The remaining $90 million of the estate remains subject to tax at each transfer and yields the diminished return we discussed. But the $100 million in the trust, funded by that initial $10 million gift, has now grown over the same 100 years to nearly $400 million, completely untouched by the estate tax that eroded the rest.
The client who does nothing leaves their great-grandchildren roughly $86 million on the original $100 million estate. The client who added the $100 million life insurance policy leaves closer to $478 million. That is close to $400 million of additional value, simply by adding life insurance in a dynasty trust. This is not planning driven by financial optimization in a vacuum. It is planning with context.
Critics who argue that rising borrowing costs or compressed cap rates make premium financing structurally unsound are applying a product-performance standard to a planning decision. The relevant measure is not whether the policy outperformed a benchmark. The relevant measure is the long-term impact on the family’s legacy plan. Through that lens, life insurance, with or without financing, has enormous value for high-net-worth clients.
Why premium financing is often the only practical path
Here is where the two concepts come together, and where the critics’ analysis falls apart most completely.
That dynasty trust structure requires the trust to own the insurance policy and pay the premiums. In straightforward situations, the client gifts cash into the trust to cover the cost. Advisors should encourage their high net worth clients to purchase the necessary life insurance, with or without financing. But is financing a more efficient option? That is the key question to consider.
Many clients urgently need this kind of planning and cannot achieve their goals by simply gifting the premiums. They are business owners. They hold assets that cannot be easily moved, divided or gifted on a standard schedule. The mechanics of traditional estate planning do not always apply.
Consider the owner of a large car dealership. Or the principal owner of a professional sports franchise. In both cases, the underlying asset is held under operating agreements or league rules that prohibit ownership by a trust. The asset cannot be gifted into a trust for premium funding purposes. Traditional estate planning is essentially unavailable to them.
But the estate tax exposure is very real and very large. If the owner dies without adequate coverage, the family will likely be forced to sell the business at a steep discount to cover the tax bill. That is not a theoretical risk. That is what happens to unprepared estates.
In this scenario, premium financing is not a convenience or an arbitrage play. It is the mechanism that enables the family to retain its legacy assets. The trust borrows the premiums with the owner’s outside assets used as collateral. The trust owns the policy. The death benefit addresses the estate tax and business succession exposure that could otherwise unravel everything the owner built. Remove the financing, and the structure does not exist.
If you look at that arrangement through the product lens, pick apart the illustration, calculate the net interest cost over 15 years, and compare it to a hypothetical alternative that focuses only on the cash value and ignores the death benefit, you can make it seem unnecessary or ineffective.
Then look at it through the planning lens. Ask what happens to the dealership, the team, the family, if the owner dies at age 55 without that coverage in force. The answer is almost always: The business is sold, usually under pressure, frequently for far less than its value, and the family that spends a generation building something comes away with a fraction of what they should have.
The real value of life insurance is measured over decades, not over years. It is an asset designed for generational impact. The argument that these clients should liquidate assets and pay premiums out of pocket misunderstands both the client and the problem. They are not illiquid because they are poor. They are illiquid because their wealth is concentrated on the things they spent their lives building. Telling them to liquidate it to fund insurance premiums is not a risk management strategy. It is a recommendation that ignores the context that defines the entire case.
The question that reframes everything
Every criticism of premium-financed IUL I have encountered makes the same analytical error. It evaluates the cost of the policy and the financing without asking what the alternative would be. It looks at how the cash value performed without asking what would have happened to the family if the policy had not been in force.
That is the wrong starting point. The relevant question is whether the client’s family was protected. Were they able to keep the business? How did the estate pay the tax bill? Did three generations of accumulated wealth transfer intact because someone had the foresight to plan?
When you ask those questions, the conversation looks entirely different. Not because the concerns about premium-financed IUL are fabricated, but because they are being applied to the wrong measure of success. Short-term analysis is being applied to a long-term solution. A policy evaluated as a short-term investment and found wanting might be exactly the best estate-planning decision the client ever made.
The lens you use determines what you see. Use the product lens, and you miss the planning. Use the planning lens, and you see the full picture.
That is the standard every advisor in this space should hold themselves to, and every client deserves nothing less.
Michael J. Rothman is the chief distribution officer at Succession Capital Alliance. Contact him at michael.rothman@innfeedback.com.
Kristin Williams, JD, LLM, is executive vice president, advanced tax planning, at Succession Capital Alliance. Contact her at kristin.williams@innfeedback.com.
