Insurance Agent Forum

[Melmunch3]

Got this in my inbox today. Sounds interesting, but this just goes to show you how much they make on an indexed annuity, that they can afford the adverse selection that this will bring.
"Good afternoon. I hope this finds you doing well. I quickly wanted to share with you the newest benefit driven product that we are starting to see more and more success with.

We are excited about the first, and only to my knowledge, index annuity with a LTC rider (not waiver) that has NO UNDERWRITING. First and foremost this is an index annuity (10 year declining surrender, 10% penalty free w/d’s, full payout on death) but if after the fifth contract year the client cannot perform 2 of 6 ADL’s, they can being receiving LTC benefits.

Every agent I have spoken with has a list of clients that were declined by traditional LTC or maybe doesn’t want to pay for insurance that they might not need. This is the perfect solution. If you have had a client declined by Gilico, Golden Rule or Moneyguard this is a perfect solution.

[fla2cali]

Wow, interesting, and kinda scary. No underwriting huh....well you know the old adage.. "if it sounds to good to be true...........", and I agree with you about adverse selection.

Mel, you didn't want to mention which company?

F2c

[Melmunch3]

Josh Karasow
Regional V.P. Marketing & Sales
First Annuity & Insurance Marketing
Phone: 888.758.7305
Fax: 866.376.6033
Email: josh@firstannuity.net
11049 W. 44th Ave. Suite 116
Wheat Ridge, CO 80033

[Insurance Phoenix]

Companies do offer life insurance with long term care riders but there is underwriting involved. I do not completely understand the annuity/ltc combination. It is your money anyway, unlike a life policy where you dip into part of the death benefit.

Arizona Auto Insurance
Insurance Phoenix

[NHB_MMA]

I don't understand this. It is an annuity and outside of the earnings on the annuity there are LTC benefits that are separate or what are we talking about?

[WBunch]

Life of the Southwest has an annuity similar to that. It is called the SecurePlus TLC. It is not a LTC rider but a higher income payout if they can not perform 2 of the 6 activities of daily living.

[JMO Fan]

The LTC rider draws down the annuity value. The LTC risk is offset by annuity risk (living too long). If they can't do ADLs, they aren't likely to outlive the annuity table, so underwriting isn't needed.

[InsureGuy5]

Sounds a little strange to me. I still like the multiplier LTC Annuity hybrids offered by MoO and Great American. Anything with no underwriting is a last case resort.

[Ichiban]

It sounds like you are talking about the product from Legacy and Investors Insurance

It is not a trick. They can afford to offer it for a couple of reasons.

1) It has a cost. 0.60%
2) 6 Year deferral period - No benefit paid for at least 6 years.

Because no benefit will be paid for 6 years they don't need to worry about getting a bunch of clients in poor health applying and immediately using the benefit. At worst they will get 6 years of 0.60% before they have to pay out. Factor in those that won't live for 6 years, those that will surrender their contracts, and those that will not need or qualify for LTC during their lifetime and it makes sense.

What I like about it: A client can use the income for anything they want once they qualify. They can use it to pay LTC costs or if they have an LTC policy keep it for their beneficiary as extra money. It is not a reimbursement and has no restrictions on how the money is used.

It is a pretty affordable alternative to LTC for people who's eyes bug out when you show them the illustrated cost of a real LTC policy.