LT care disability insurance is an investment linked policy


A Welfare Disability Long-term Care insurance policy is a cash value policy if final obligation of insurer adjusted to reflect the investment return or market value of assets associated with the contract
1. Insurance company claims policy assets are not linked to investments, yet the insurer entices clients to subscribe to policy because if there is no claim for disability, the final payment will reflect investments. That is why the policyholder can select custodian bank and investment manager for the policy assets.

2. Except for death benefits, all other benefits from investment-linked insurance policies are regarded as cash-value CRS commentary page 180 paragraph (76) removes the exemption of indemnification insurance from the exclusion of cash value if any amount payable by insurer is investment-linked. This defines clearly, without ambiguity what an investment-linked policy is

CRS page 180 paragrapgh (76). Subparagraph C(8)(b) excludes from the term “Cash Value” an amount payable under an Insurance Contract as a personal injury or sickness benefit or other benefit providing indemnification of an economic loss incurred upon the occurrence of the event insured against. Such “other benefit” does not include any benefit payable under an investment-linked insurance contract. An “investment-linked insurance contract” means an insurance contract under which benefits, premiums, or the period of coverage, are adjusted to reflect the investment return or market value of assets associated with the contract.

CRS page 175 paragraph (59) also defines a Financial Account (i.e. subject to review for CRS due diligence by the FI maintaining the account) investment linked policies - The term “investment-linked annuity contract” means an Annuity Contract under which benefits or premiums are adjusted to reflect the investment return or market value of assets associated with the contract.

The Welfare Disability Long-term Care contract under review is an investment-linked insurace policy which has an amount payble at end of contract that is linked to the performance of te assets associated with the policy. The policy is segregated, and policyholder can choose custodian ad investmet manager. Therefore the assets or reserves are not in a general pool.
3. The insurer claims the Welfare Long-Term Care and Disability contract is not linked to investments, yet the policy has segregated assets at the underwriters level. This is investment linked policy despite insurer's claim to the contrary The Final liability of the insurer are whatever reserves are unused claims for disability / Long Term Care under the contract on a last to die basis.
4. The insurer's claim that the policy is not an investment-linked policy is incorrect. Of course the WDLTC policy is an investment-linked policy as is thus, contrary to the insurer's protestations, reportable under the OECD's Common Reporting Standard.
  • Why is the policyholder subscribing with millions for such policy on the promise that he will get his investments back
  • The policyholder can elect a custodian bank for the policy assets
  • The policyholder can elect an investment manager for the policy assets
  • Insurer claims it is merely a re-insurer with pooled assets, but that the assets are segregated at the underwriters level.