Effective November 1, 2021, the guaranteed interest rate on new SecureCare Universal Life (SecureCare UL) applications will be updated to comply with the Consolidated Appropriations Act of 2021, which lowers the interest rate assumptions used in Section 7702 of the Internal Revenue Code.
How will these changes impact SecureCare UL benefits?
Long-term care (LTC) benefits: The new guaranteed interest rate will have no impact on the LTC benefit pool. Regardless of whether an applicant receives the old or new guaranteed interest rate, the amount of LTC coverage they receive will be the same.
Death benefit: The change to the guaranteed interest rate reduces the minimum required death benefit factors used in the Cash Value Accumulation Test (CVAT). While some plan designs are not affected by these changes, this can result in lower death benefit amounts for some SecureCare UL policies in the corridor:
- Generally, single-pay policies impacted by the 7702 changes will see a death benefit reduction immediately, while impacted multi-pay policies will see a reduction towards the end of the premium payment schedule.
- If a policy’s death benefit amount is impacted by the 7702 changes, the difference between the old guaranteed interest rate’s death benefit and new guaranteed interest rate’s death benefit diminishes over time until they eventually match up.
Cash surrender value: Some policies may see a slight increase in the cash surrender value. However, some plan designs are not affected by the changes.
Friday, October 29, 2021 – Applications must be signed, in good order, and received by Securian Financial before end of business on October 29, 2021, to be eligible for the old guaranteed interest rate. Applications received after October 29, 2021, will receive the new guaranteed interest rate
- Please note: given the extended turnaround times the LTC industry is experiencing as a whole, we are not able to guarantee that applications received by October 29 will have all of their requirements completed in time for the policy to be paid in 2021. Our service teams understand the importance of meeting this deadline and are operating at full capacity.
Monday, November 1, 2021 – The new guaranteed interest rate will be available in the illustration software.
Friday, December 31, 2021 – Policy issuance and funding deadline to receive the old guaranteed interest rate
- Applications received no later than October 29, 2021, must be approved, issued, and paid before January 1, 2022, per The Consolidated Appropriations Act. If the policy is not approved, issued, and paid by December 31, 2021, the policy will be reissued with the new guaranteed interest rate. This is a regulatory requirement, and NO EXCEPTIONS will be made.
- Applications received after October 29, 2021, will receive the new guaranteed interest rate even if they are approved and paid by December 31, 2021. No exceptions will be made.