As part of one of the largest multi-line insurance companies in the United States, the Boston-based Liberty Mutual Life Insurance company is a relative youngster in the American life insurance market at less than 50 years old. Officially known as “Liberty Life Assurance Company of Boston,” Liberty Mutual Life Insurance nonetheless offers a wide range of life insurance and annuity products. The company is a leader in the structured settlement industry as well.
The Liberty Mutual Group currently holds an A (excellent) rating from A. M. Best for financial strength. The company also holds an A- (strong) rating from Standard and Poor’s.
History and Structure
The ancestor of Liberty Mutual Life Insurance was founded as the Massachusetts Employees’ Insurance Association in 1912. The company was founded as a mutual insurance company owned by policyholders and has maintained that basic structure throughout its history.
Originally the company provided only workers’ compensation insurance, but upon changing its name to Liberty Mutual in 1917 it began entering the property and casualty insurance business. By 1937 Liberty Mutual was doing business in every state in the country. Property and casualty continues to be a main focus of Liberty Mutual, culminating in its acquisition of the large Seattle-based property and casualty insurer Safeco in 2008.
In contrast to many of its competitors, many of whom have been selling and servicing life insurance for over a century, Liberty Mutual entered the life insurance business relatively late in the game. Liberty Life Assurance Company of Boston – the company’s principal life insurance underwriter – was founded in 1964. The company is based in Boston and operates as servicing center in Dover, New Hampshire.
Through Liberty Mutual Group and its other subsidiaries, Liberty Mutual Life Insurance maintains a network of primarily independent agents, but also contracts with captive “career agents.” Variable products are distributed by Liberty Life Securities LLC, however the company is not currently offering variable products for sale.
The following product discussions are intended to be a generic representation of the policies Liberty Mutual Life Insurance offers. Not all products may be available in every state as described. In addition policy features and underwriting requirements may change without notice. Consult with a Liberty Mutual Life Insurance agent for the most up-to-date information.
Liberty Mutual Life Insurance offers three term products, the Passport 10, Passport 20 and Passport 30. The products are differentiated by the terms they provide, 10, 20 and 30 years respectively. All three products can be converted without additional underwriting to permanent life insurance products. They also offer a credit towards premium on a permanent plan if converted in the first five years.
All Passport policies include an accelerated benefit rider in the event of chronic or terminal illness. Other riders, including disability waiver of premium, are also available.
Six variations of the whole life model are offered by Liberty Mutual Life Insurance. The Liberty Series Whole Life policy is designed with level premiums and is considered paid in full when the insured reaches 100. However, the policy (like all other Liberty Mutual Life Insurance whole life policies) does not endow until age 121.
This paid in full model is followed by four other available policy types from Liberty Mutual Life Insurance. The Liberty Series 20-Year Payment Life is designed to be paid in full 20 years after policy issuance, while the Liberty Series Paid-Up at 65 is paid in full at the policy anniversary immediately following the insured’s 65th birthday.
The Liberty Series Joint Whole Life is a two-party, first-to-die survivorship policy available in the paid up at age 100 model only. The policy is often taken out by married couple or business partners and is often less expensive than two separate policies. For the purposes of determining age, the “age” the policy is issued at is an average of the two parties.
The Liberty Series Extra Value Life is a policy that combines both whole and term coverage with the aim of maximizing coverage while minimizing premium. Like the Liberty Series Joint Whole Life, it is available in the paid up at age 100 model only. The term portions of the policy are convertible to permanent coverage if desired.
Finally, Liberty Mutual Life Insurance offers a single pay whole life product. This policy, the Liberty Series Estate Maximizer, is considered paid in full after a single premium payment. While these premiums are invariably quite substantial, the face value of the policies they fund can easily be more than double the amount of the payment. Single pay whole life policies are typically used for estate planning purposes, as life insurance death benefits are generally exempt from estate taxes.
Liberty Mutual Life Insurance fixed universal life (UL) policies are pretty typical of UL policies issued throughout the industry. The Performance Universal Life product is a fairly traditional UL policy, while the Split Series Universal Life product provides a lower-cost permanent insurance alternative with several no-lapse guarantees built int. The trade-off is that by design the Split Series Universal Life does not develop a significant cash value.
Although Liberty Mutual Life Insurance continues to service its existing variable universal life (VUL) policies, the company no longer underwrites or issues new VUL business.
Annuities and Other Products
Liberty Mutual Life Insurance Companies offers two forms of fixed annuities, a single-payment deferred annuity and a flexible payment deferred annuity. Both policies require a waiting period between initial funding and distribution, but as its name suggests the single-payment deferred annuity is funded with a single, substantial payment. The flexible payment deferred annuity allows for installment payments, but no more frequently than quarterly. Liberty Mutual Life Insurance does not currently offer a variable annuity.
Liberty Mutual Life Insurance is a major underwriter of structured settlements. These specialized financial vehicles are often issued to individuals who win money in lawsuits in lieu of lump sum payments. Once issued structured settlements operate in much the same way annuities do during the distribution phase, paying out fixed monthly payments to the policy owner. Many court and victim advocacy groups favor structured settlements over lump sum payments as they minimize the risk of successful lawsuit damage seekers (who are often permanently disabled or otherwise unable to work) from living beyond their means.
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