Federal Life made headlines earlier this year when they announced the launch of several long-term care (LTC)-focused products, including their Reframe LifeStage product. We haven’t seen such a big splash in terms of new LTC market entry in some time, so we contacted the company to find out more about what motivated them to expand into LTC.

We were thrilled when Bridget Ray, executive vice president of Accident & Health Insurance at Federal Life, kindly agreed to partake in a short interview for the LTC Lowdown. Bridget is responsible for new business growth, product development, and sales and marketing initiatives targeting niche market opportunities for Federal Life’s Accident & Health (A&H) and Later Life portfolios. Enjoy our discussion with Bridget below.

Oliver Wyman: Can you tell us a bit about Federal Life's history and what motivated the company to enter the LTC market?

Bridget Ray: Federal Life is a boutique insurance carrier that is committed to being at the forefront of transforming the insurance industry by offering unique and innovative protection and process solutions. Federal Life was incorporated in 1899 in Chicago as an independently operated provider of life and annuity products. In 2021, we expanded our product portfolio by creating an A&H division and introducing a Medicare Supplement plan. Over the last two years, we have continued to spearhead cutting-edge product design and introduced several other A&H products. The creation of the Later Life (LTC) portfolio was driven by our strategic alignment with niche markets and the limited innovation and product scarcity we perceived in the LTC marketplace.

We understand that Federal Life is entering the LTC market with four Later Life LTC-focused products: LTC riders on life insurance chassis (whole life and indexed universal life), traditional LTC in partnership with Assured Allies' NeverStop wellness program, and short-term care. What motivated you to introduce these four products concurrently?

Bridget: These products are strategically aligned with our growth objectives and provide an opportunity to deliver Later Life and LTC solutions to consumers throughout different stages of their life. By expanding LTC insurance access to different demographics and distribution channels, we can better meet the needs of our customers.

Can you tell us a little more about each product's design? What differentiates these offerings from products currently available in the market?

Bridget: Federal Life strove to create a portfolio of Later Life products that could meet the needs of consumers of all ages.

The Reframe Financial LifeStage product is targeted for consumers who are 35 to 55 years old (the millennial and Gen X generations). The LifeStage product is a hybrid policy that features Indexed Universal Life insurance with cash value and LTC benefits. The policy is designed to evolve and grow in value over time to meet changing customer needs at key life stages.

The MyLTCShield product, created in conjunction with Assured Allies, is geared toward 55- to 75-year-olds. The unique features of the MyLTCShield plan include a virtual underwriting session that delivers an application decision in 30 minutes or less as well as the embedded NeverStop wellness program that gives the insured, with active participation, the ability to increase their total LTC benefit amount.

The new whole life product includes an accelerated death benefit rider for LTC, while the Short-Term Care plan, MyCareShield, is targeted toward those consumers who may not be able to afford a traditional long-term care plan and will be introduced in 2024.

Federal Life also recently introduced a fifth Later Life product, a new-to-the-U.S. single premium annuity (MyImmediateCarePlan), targeted to individuals aged 70 and older that are currently receiving paid-for care but are experiencing a monthly income gap that is impacting their ability to continue paying for their care. While this product would not provide LTC benefits per se, policyholders can use the monthly annuity income to cover their LTC costs.

Regarding the recently announced Reframe LifeStage product, can you tell us how the product's distribution and underwriting differ from that of other LTC/life combination products currently available in the worksite market?

Bridget: The Reframe LifeStage product will be sold in the worksite and association markets through Managing General Agents (MGAs) and traditional broker consultants. Reframe Financial's trailblazing eApp system provides instant decision underwriting results supported by the Swiss Re Magnum system.

Consumer interest in LTC insurance has increased over the last several years, partly due to the launch of Washington's state based LTC insurance program (WA Cares Fund). Given the heightened interest and continued exploration in publicly funded LTC options, what do you think are the most significant opportunities for growth and innovation in the LTC insurance market?

Bridget: There is no shortage of opportunity in the LTC space due in large part to the combination of interest generated by the WA Cares Fund and product scarcity. Federal Life is bringing to market a suite of Later Life products that can help consumers age successfully and redefine how we think about planning for LTC. Our suite of solutions is targeted to multiple consumer cohorts and leverages an omni-channel distribution strategy. Through these offerings, Federal Life is leaning into our promise of meeting customers where they are with extraordinary protection solutions while also enhancing their insurance buying experience to be quick and easy.

What were your biggest challenges and lessons learned during the "Later Life" product development process?

Bridget: The challenge with bringing pioneering products to market is trying to introduce new LTC plans into existing distribution channels. The most important lesson learned is that we would not have been able to realize these products without innovative and like-minded partners such as Reframe Financial, Swiss Re, Assured Allies, Vidale Marketing, Hannover, and Bain Capital.

This interview was published in the June 2023 edition of Oliver Wyman’s LTC Lowdown, a quarterly newsletter focusing on the latest LTC insurance industry news and trends from an actuarial perspective. Click here to subscribe to the LTC Lowdown or one of Oliver Wyman’s other actuarial newsletters.