Royal Neighbors of America Review

About Royal Neighbors

From its headquarters in Rock Island, Illinois, Royal Neighbors of America presents itself differently than most life insurance companies.

Royal Neighbors was formed in the late 19^th Century as a fraternal benefit society by a group of nine women whose goal was to, among other things, make the benefits of life insurance available to women and children.

Today, Royal Neighbors markets itself as “one of the largest women-led life insurers in the country.”  The company touts its duel mission of providing both life insurance and “neighbor-helping-neighbor community service.”

Royal Neighbors’ policyholders are referred to as “members,” and the company negotiates member discounts with providers of prescription drugs, legal services, and online shopping.  Membership benefits are available to all policyholders at no extra charge and to the general public for a $30 annual membership fee.

As of 2019, Royal Neighbors had over 215,000 members and over 200 local chapters organized for volunteer work under the company’s auspices.

Although Royal Neighbors’ marketing materials emphasize the company’s goal of protecting women financially, Royal Neighbors policies are also available for men.

Royal Neighbors Financial Ratings

A.M. Best: A-
Fitch: NR
Moody’s: NR
S&P Global: NR
Comdex Ranking: NR

As of 2019, Royal Neighbors held over $1 billion in assets along with over $180 million in revenue and $8.3 million in net profit.

Like most insurers, Royal Neighbors has a fairly conservative asset-management philosophy designed for reduced risk and ample liquidity.

Overall, Royal Neighbors—though smaller than many players in the life insurance industry—has a strong, stable financial position, and the prospect of insolvency or non-payment of policy benefits is very low

BBB

Royal Neighbors has been accredited by the BBB since 1986 and currently enjoys an A+ rating.  While the company appears to be responsive to complaints in general, its two-star BBB consumer-review rating suggests room for improvement in customer service, though BBB’s sample size is exceptionally small.

Products Offered by Royal Neighbors

• Whole Life Insurance
• Youth Whole Life Insurance
• Final Expense Insurance
• Term Life Insurance
• Annuities

Life Insurance Policies Offered by Royal Neighbor

JETerm Life Insurance:

JETerm policies provide term coverage at fixed-rates for policy periods of 15, 20, or 30 years.

Coverage is available to new applicants between ages 18 and 65 (age cut-offs are lower for longer terms) in face-value amounts of $50,000 to $5 million.

Policies can be renewed through age 90, though premium rates are annually increased upon conclusion of the initial term.

During years three through twelve (or year nine for 15-year policies), coverage can be converted to whole life.  However, a conversion option cannot be elected after the insured’s 60^th birthday.

Essential Life (Whole Life Insurance):

Essential Life provides whole life coverage to new applicants over age 18 and under 86.  The minimum face-value coverage amount is $25,000, and non-medical underwriting is available for certain applicants that meet age and face-value requirements.

As whole life insurance, Essential Life policies accrue cash value, which grows tax-deferred at guaranteed rates.  However, Royal Life does not regularly issue dividends on their whole life policies.

Limited pay life insurance policies are available so fixed premiums can be scheduled so that a policy is paid-up after 20 years (20-pay), after the insured reaches age 65, or effectively for life (age 121).

Youth Essential Life (Whole Life Insurance):

Youth Essential Life provides level-premium whole life coverage to children up to age 17 at the time of application, with a minimum coverage amount of $10,000.   Premiums can be set up as 20-pay or through age 121.

Royal Legacy Life (Single Premium Whole Life):

Royal Neighbors’ single-premium whole life policy, Royal Legacy, is available to applicants between ages 45 and 80.

Coverage amounts are available from $10,000 up to $200,000.  Underwriting requirements are based on the “net amount at risk,” as determined by Royal Neighbors, and simplified-issue is available at lower risk levels.

Royal Legacy is designed as an estate-planning tool that can enhance non-probate wealth transfer to heirs and reduce transaction costs and taxes.

Neighbors Final Expense Plan:

Royal Neighbors’ standard final expense insurance coverage is a simplified-issue whole life policy available to new applicants from ages 50 through 85.

Coverage amounts are available from $5,000 to $25,000.

The application process does not require a medical exam, though a medical questionnaire and telephone interview are usually required.

Graded-Benefit Final Expense:

An alternative graded-benefit policy with relaxed underwriting requirements is intended to make final expense coverage available to a larger pool of applicants.

This burial insurance plan for seniors has a waiting period of two years.  If death occurs during the first year after issuance, policy proceeds are measured as 30% of face value.  In the second year, proceeds are increased to 70%.

After two years, full death benefit coverage kicks in.  Like most graded-benefit final expense policies, an accidental death exception provides for full coverage during the waiting period if death results from a qualifying accident.

SecureLife Universal Life Cash Value:

Royal Neighbors offers two basic universal life policies—one emphasizing cash-value accrual, and one emphasizing guaranteed death benefits.

The cash-value UI policy is available for applicants up to age 85 (or 75 for tobacco users), with minimum coverage of $50,000 and no-exam underwriting for eligible applicants (based on age and benefit amount requested).

Cash-value growth is variable, linked to investment performance, but with a minimum annual growth rate of 3.00%.

After ten years, cash-value loans are available at 0% net cost.  Up till then, the loan rate is 4% net costs.

Surrender fees apply if a policy is surrendered during the initial 15-year period after issuance.

SecureLife Universal Life Death Benefit:

Royal Neighbors’ death-benefit-focused universal life offering is available to new applicants up to age 75 in minimum coverage amounts of $50,000.

Premium payments are flexible, though Royal Neighbors applies a “cumulative minimum premium test” in order for the 20-year death-benefit guaranty to remain effective.

Available Life Insurance Riders

Royal Neighbors makes a wide range of riders available to enhance the benefits provided by its life insurance policies.  Not all riders are available in every state or with every policy.

Accelerated Death Benefit:  Royal Neighbors offers riders accelerating death benefits if an insured is diagnosed with a terminal illness, critical illness, or chronic illness.

The terminal illness rider pays out up to 95% of a policy’s death benefit (not to exceed $450,000) if the insured is diagnosed with less than 12 months to live.

The chronic illness rider allows acceleration of 80% (up to $400,000) if the insured is medically unable to perform activities of daily living.

And the critical illness rider pays out a benefit ranging from $2,500 to 25% of the policy’s death benefit (not exceeding $100,000) if the insured is diagnosed with one of several severe medical conditions identified in the policy.

An accelerated living benefit rider paying out in the event of nursing home confinement is also available for JETerm.

Child Rider:  The child rider provides a $5,000 term life death benefit for the children of the insured until the insured child reaches age 25.  The rider must be elected before a covered child reaches his or her 18^th birthday.

Waiver of Premium (Disability): If the insured becomes totally disabled before reaching age 60 and the disability lasts at least six months, premiums are waived during the period of disability.

JETerm also has a premium waiver in the event the insured is diagnosed with certain forms of cancer before reaching age 60.

Accidental Death: If the insured’s death occurs before age 65 resulting from a qualifying accident, an additional death benefit of between $25,000 and $300,000 is paid out to the beneficiary.

Guaranteed Insurability:  If purchased, the guaranteed insurability rider provides the insured with the guaranteed right to purchase $25,000 of additional life insurance coverage with no further underwriting.

Purchases must be made at designated election intervals starting at age 18 and ending at age 60—or at defined life events such as marriage, childbirth, or purchase of primary residence.  The maximum total additional coverage that can be purchased is $100,000.

Flexible Premium Deferred Annuity:  This rider links a deferred annuity intended as a retirement-savings vehicle to a whole life policy.  Linked annuities grow tax-deferred, and additional premiums required for the annuity are flexible—though subject to monthly minimum of $50 and yearly maximum of $25,000.