MetLife established itself as one of the biggest insurance companies in the United States since its inception. A few years back, however, they decided to have a separate company manage and run their individual life insurance operations. That company is Brighthouse Financial and this is our review of what they have to offer.
In this article, we’ll take a look at what Brighthouse has to offer when it comes to life insurance. We’ll tackle each product’s features, pros and cons, available riders, and explain what a hybrid life insurance like SmartCare (Brighthouse’s Permanent Life insurance offering) is about and why this type of coverage has become more popular in the last few years.
History of Brighthouse Financial
Brighthouse Financial was founded by financial industry giant Metlife in January 2016 to serve as the dedicated company arm for their life insurance and annuity products.
A year later, Brighthouse established itself as a separate company from MetLife and went public on August 2017. MetLife has a 19.3% stake in the company when the separation completed that year and then divested these remaining holdings with four companies that MetLife owed through a debt-for-equity exchange program.
Today, Brighthouse has more than $220 billion in assets and has more than 2 million life insurance policies and annuities inforce. Their annuities line-up include:
- Variable annuities
- Income annuities
- Index-linked annuities
- Fixed annuities
Brighthouse Financial Ratings
Brighthouse boasts of strong financial ratings that include the following:
- A.M. Best: A+
- S&P: AA-
- Moody’s: Aa3
- Fitch: AA-
- BBB Rating: A+
- J.D. Power: 3 of 5
Brighthouse Financial Life Insurance Products
Since establishing itself as a separate company from MetLife, Brighthouse Financial trimmed down their life insurance offerings. For their Permanent Life Insurance option, they have SmartCare, an indexed universal life insurance with long term care benefits via use of riders.
For their Term Life insurance, they have Guaranteed Level and One-Year term options. Let’s take a closer look at what each one has to offer.
Guaranteed Level Term
Term insurance is generally the most cost-effective type of coverage. The death benefit can be used to fund the following:
- Income replacement for supporting beneficiaries
- For paying off mortgage
- For paying off your child’s education
- To cover costs for funeral and estate settlement
- To cover costs for child care services
With a guaranteed level term, your premium rates are locked-in. It means what you pay on a regular basis won’t change as long as the policy is in effect. The death benefit guarantees to remain the same.
Brighthouse offers it in 10, 20, and 30 year terms. Note though that the 30-year option is currently not available in New York. Coverage starts at $1 million and converts into permanent life starting at the fifth year of the policy and offered until the policyholder reaches 70 years old.
Should you opt to change your term coverage into permanent life, you won’t be required to take a new medical exam. Your original health rating will be used for the assessment.
One Year Term
A one year term insurance provides protection when you need it most. For example, if you want to bridge a gap in coverage when you’re in between jobs, want to increase your coverage before Social Security payments and pension start, or want to get insured for an extended trip. It’s a great choice for anyone looking for short-term protection.
Both Guaranteed and One-Year term life policies feature the following benefits:
- Level premium – How much you pay in premiums guarantees to remain the same throughout the duration of the policy.
- No-risk obligation – You can cancel your policy at any time. On the other hand, Brighthouse can’t cancel your policy as long as you’re paying your premiums.
- Terminal Illness Benefit – You have the option to access a portion of your death benefit via the use of the accelerated death benefit rider. Policyholders that are disabled or with terminal illnesses are eligible for this option.
- Convert to Permanent – Starting at year 5 and before the policyholder reaches 71 years old, the term coverage can be converted into permanent without the need for a new medical exam.
Brighthouse’s only permanent life insurance offering, Smartcare, is an indexed universal life insurance that features long-term care benefits via the use of riders.
Indexed universal life insurance lets the policyholder choose between fixed account or equity index account for where the cash value will be invested. Examples of indexed policy options include Nasdaq 100 and S&P 500.
This type of life insurance lets individuals receive tax-deferred growth for their retirement while having a guaranteed death benefit at the same time.
Brighthouse markets Smartcare as a hybrid policy that promises to provide the best of both worlds by combining a death benefit and long term care funding.
The last few years revealed that these hybrid life insurance policies are getting more popular. There was a 50 percent increase between 2012 and 2016 in hybrid policies bought while sales of traditional long term care plans declined by as much as 60 percent. This is according to a report by insurance marketing research firm LIMRA.
What Makes These Hybrid Policies Appealing
Traditional long term care insurance is a “use-it-or-lose-it” type of coverage. This somehow makes it tough for people to commit to simply because they won’t be getting anything if they end up not needing long term care. It’s similar to term life insurance, where you get coverage for a set amount of years but won’t get anything if you live past the policy.
People want coverage for their needs later in life but don’t want to “throw away money”, so to speak, on something that they may not need. Traditional long term insurance requires that you pay premiums to keep the LTC benefit in place, but you’re not accumulating a cash value or getting anything else if the policy is not used.
With hybrid offerings like Brighthouse’s SmartCare, you can use a part of the policy’s death benefit to help in paying for expenses like assisted living or qualified home care, including medical and other expenses for everyday living.
If you end up not needing funds for long term care, your beneficiaries will receive the full death benefit payment. Now, note that they will still get the death benefit even if you utilize a portion of it for LTC.
Brighthouse positions SmartCare as a “simple way to safeguard your money for long term care”. Since it features multiple pay options, you can set your own time frame for paying your premiums and once complete, you don’t have to make any other payments to keep the policy in place.
The Center for Retirement Research at Boston College conducted a study in 2015 that revealed that more than one in four people aged 65 who purchase traditional LTC insurance ends up stopping payment for their premiums.
According to the report, these policyholders lapse on their payments because of “financial burden” or “cognitive decline”. This could actually mean these lapsers are more likely to need LTC because of poor decision-making due to a decline in cognitive abilities.
One important feature worth noting is that Brighthouse SmartCare is an indemnity plan that pays the policyholder monthly benefits that may exceed their actual long term care expenses.
If a policyholder is deemed eligible to receive the benefit, they have access to the maximum benefit amount dollars available. This is regardless of the actual charges or expenses related to long term care. More importantly, the policyholder will not be required to submit receipts and invoices to access their benefit.
Overall, a hybrid life insurance policy such as SmartCare provides the users with the following benefits:
- Helps in funding potential long term care needs in the future
- Guaranteed death benefit for the beneficiaries
- Cash value build up, participation in Market growth
Hybrid vs. Traditional Long Term Care Insurance
|Will premiums increase||Yes (possible)||No. Rates are locked.|
|How often will I pay premiums?||You’ll have to pay for it for as long as you want to keep the policy in place||You can choose to pay it lump sum or installment (spread across your preferred schedule)|
|Care benefits||Monthly amount for LTC costs||Monthly amount for LTC costs|
|Return of premium clause||No||Yes|
|Guaranteed Benefit||Yes, provided the policy doesn’t lapse due to non-payment||Yes, once premiums are paid|
Brighthouse Financial Life Insurance Riders
Even though they have a limited selection of life insurance products, Brighthouse offers a couple of useful riders that boosts the value of their policies.
- Waiver of Premium for Disability
- In the event the policyholder becomes disabled for more than 6 months, he or she won’t be required to pay premiums
- Acceleration of death benefit
- Allows you to receive a portion of your death benefit when you fall terminally ill with a life expectancy of 1 to 2 years. For example, if a person is diagnosed with brain cancer and is expected to live for less than a year, he or she requests to collect an accelerated death benefit. The company will assess his request and issue the requested amount which they will deduct from the total death benefit.
- Option to convert and renew to a different policy
- If you have a One-Year Term policy, you can choose to renew it for up to five years (with increase in premiums). You also have the option to convert it to a SmartCare.
Brighthouse Financial Life Insurance Pros and Cons
Brighthouse has plenty of good things going for it. There are some notable cons especially when compared to other life insurance companies.
- Strong overall financial ratings. Brighthouse ranks highly by third party insurance agencies in terms of ability to fulfill claims
- Competitive rates on all their policies. Even if they have a limited selection of life insurance policies, they price well and on par with what other companies offer.
- Minimal surrender fees. Brighthouse is one of the few insurance companies that don’t charge excessive surrender fees when you need to access the cash value in the account.
- Limited life insurance offerings. In total, Brighthouse only offers three types of policies: One-year renewable term, guaranteed term life, and SmartCare (Indexed Universal Life)
- Optional riders are limited. Compared to other insurance companies, Brighthouse doesn’t offer a lot. They only have three riders available currently.
- Extra step to apply. You must first find a financial professional on your own who will work with Brighthouse on your behalf. You have to speak or consult with a financial representative to sign up for a policy. Compared to other companies like Banner Life or Haven Life, Brighthouse’s method is more time-consuming and less smooth.
Brighthouse Financial Life Insurance: Is it for you?
If you are looking for term life insurance with fixed premium payments throughout the course of the policy, then Brighthouse’s Guaranteed Term Life Insurance can be a good choice. Same goes if you need a one-year renewable term for short-term coverage. Both are competitively priced and offer plenty of value for your money.
A hybrid life insurance like SmartCare can be a great choice for those looking for both a death benefit and long term care funding. And since it’s a permanent life insurance, you can take advantage of its cash value perks and potential market growth.
This combination of features makes it quite an enticing option. Especially now that there has been an increase in the number of people needing long term care in the US. A hybrid option like SmartCare makes it’s customers feel like they aren’t throwing their money away.
With its strong financial ratings and reputable company background, Brighthouse is a decent choice for anyone looking for life insurance. If you need assistance in deciding which type of life insurance is best for you or what to know more about it, you can speak with one of our professional advisors for free and discuss your options.