Just the opposite is true.
Since an LTCi claim is more likely, the combo product is a terrible deal compared to a traditional LTCi policy.
Article Suggests Moving CDs into LTC
- Thread starter 1reason
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Just the opposite is true.
Since an LTCi claim is more likely, the combo product is a terrible deal compared to a traditional LTCi policy.
Bullshit Scott.
Some people will need care; some people will not need care. No one knows which circumstance will apply to them. An actuary however prices each policy for all circumstances based upon all factors: mortality costs, morbidity costs, time value of money. Now you may prefer a stand alone policy; and you may always sell against a hybrid policy out of personal bias; but I feel both options are equally viable and it is best to let the client decide.
- 10,330
I couldnt agree more. 5 or 6 years ago combo products looked decent. But since rates have dropped you are just putting money to sleep.
To expand on Scott's example:
Lets assume that $100k into a state life single pay earning 1% will give you a liquid $122k after 20 years.... (even though every illustration ive seen your in the red for anything but death)
Instead, put $30k into a 20 year SPIA and it will payout $40k over 20 years into a traditional LTCI policy.
Then the $70k thats left, earning 3%, will be $126k after 20 years.
You could go with MedAmerica and do a true 20 pay and even throw ROP on there... then it becomes the exact same thing as state life except you actually get growth and liquidity...
From the illustrations ive seen a MedAm 20pay with ROP is no different than a State Life single pay from an economic benefit standpoint.
My clients are practically 100% in favor of single-pay hybrids; so my numbers tell me to tell you to adjust your thinking to my client base.
My clients are practically 100% in favor of single-pay hybrids; so my numbers tell me to tell you to adjust your thinking to my client base.
I won't sell a product that I would not recommend to a family member.
Scott A. Olson
LTCShop.com
- 10,330
My clients are practically 100% in favor of single-pay hybrids; so my numbers tell me to tell you to adjust your thinking to my client base.
Just because something is an easy sell doesnt mean it is the best option from an economic standpoint.
Clients are not experts on insuring risk or leveraging assets to do so. It is our job to educate them on the best option for their situation.
Often it is funds they do not plan to use which are paying the premiums for the lump sum hybrid. Which is why putting money to sleep is an easy sell... because they dont need the money and know they need some type of LTC protection.
But that doesnt mean there are not better options. And if they were shown those alternative options many would agree.
If you go by consumer sentiment, you should get in the market when its at an all time high and get out of the market when its at rock bottom. Consumers dont know what they dont know unless you educate them on it.
Numbers dont lie. Put the 2 side by side and your SL closing %s would drop dramatically.
Lifetime pay or 20 pay options are not priced in any compelling fashion on hybrids; My clients all like the single pay options (strictly using State Life modal numbers for all options). Besides, the buyer is typically 65-70; they are not looking for extended pay options at this stage of their life.
Too many insurance salesmen view everything from their own perspective instead of from the client's perspective.
Newsflash: it is not about us. It is about our clients.
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Tyler,
Traditional LTC policies have risk of significant rate increases. Hybrids do not. You can't compare the two.
And the State Life policy offers Unlimited LTC benefits too. Cant compare unlimited to limited.
- 10,330
Did you miss where I said it is about doing whats best for the client?
And you are looking at this from your own personal paradigm. What I am talking about IS a single premium option! Just because it uses a traditional policy does not make it an extended pay option.
Show the 2 options side by side and see how few SL policies you sell. They are BOTH single pay options in the solution I mentioned. One puts money to sleep, the other doesnt. Let the client decide what they think is best... since its all about the clients...
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Now its my turn to call bs....
Yes they have the rate increase risk. But it would have to be over a 40% increase for my scenario not to work out better from an economic standpoint...
You most certainly can compare the two. Its not true apples to apples, but you can still make an educated decision. Im not saying that single pay hybrids are always a bad deal. But I do feel for many situations there are options that will leave them with a higher amount of liquid funds. Some clients like that idea, others dont. Again, dont discount an option, show both and let them decide.
jmo
Tyler, how many times a day do you refer to "putting money to sleep" whenever you speak of single premium hybrids? Think of another sales line. Please.
And using SPIAs to fund a traditional policy is not a single pay option. Rate increase risk changes all the parameters. And clients do not want to apply for multiple policies to solve one need. I overanalyzed and tried that routine 15 years ago. Clients did not like it at all.
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