Goodbye Guardian
- Thread starter Arthur Rudnick
- Start date
- 10,326
I agree with you.
Combo products are the way of the future most likely. Especially the lump sum/5 pay/10 pay annuity/ltc products such as LFGs Money Guard.
But the one trick LTC ponies out there will keep their heads in the sand until the bitter end about the future of their industry.
Combo products are the way of the future most likely. Especially the lump sum/5 pay/10 pay annuity/ltc products such as LFGs Money Guard.
But the one trick LTC ponies out there will keep their heads in the sand until the bitter end about the future of their industry.
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by "few" do you mean "2 or 3" or do you mean "20 or 30"?
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As a consumer I wouldn't buy a combo product because I use my own money to pay for my own care. Isn't the point of insurance to avoid using your own money?
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- 10,326
The point of insurance is to mitigate risk and usually/hopefully leverage your money to some extent.
Most people concentrate on the leveraging of money...
Currently, a 55 year old with a lump sum of $100K, put into a 5 year immediate annuity and payed into a 5 pay MoneyGuard, will yield over $800K in LTC benefits by age 75.
It also will yield over $120k in surrender value and $180k in DB by that age.
That is leveraging your money and mitigating your risk; aka, insurance.
You forgot to mention to sex of that person, I assume it's a female. The numbers would be substantially worse for a male. But, even the numbers for the female are not that great.
For about the same cost as that policy, TWO PEOPLE (a husband AND wife OR two domestic partners) could each get a single-pay LTCi policy with a full refund of premium upon death if they didn't make a claim. The LTCi policy would even be Partnership Qualified and provide protection for their assets from Medicaid if they were to exhaust the benefits and have to qualify for Medicaid.
Essentially, the single pay LTCi policy with a refund of premium would provide almost TWICE the benefits for the same premium.
But, to be frank, the ROP rider on most LTCi policies is usually not a good deal. They'd be better off in most cases just buying a separate single pay GUL policy.
Combining policies rarely makes sense.
In nearly every case I've looked at, instead of paying one single lump sum for a Life/LTC combo product, they can get better benefits for less premium if they purchase two separate products: a single pay LTCi policy and a single pay GUL policy.
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- 3,344
LTC and Life agents like to feel fancy selling tricky combo products...Makes them feel important, while the combo products usually suck.
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Honestly, I had no idea that there were that many traditional LTCi companies in the market.
I'll have to honestly look at what you suggest by offering the LTCi policy coupled with a GUL to replace the money spent on the LTCi policy. Hadn't considered that as an option.
I certainly don't think products like Moneyguard are the solution to every problem, definitely more of a product to leverage assets. And certainly is not a fit for clients who lack liquidity. But also consider that clients who can get through underwriting for Moneyguard may not be able to get a favorable or affordable offer for a traditional LTC policy or a GUL.
- 10,326
Nope, pretty sure it was a Male non-smoker that I ran.
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The problem is that you dont understand the consumer mindset.
People dont buy LTCI because they dont want to loose control of a major portion of their assets;
LTCI is a well understood need, but the need to keep control of their assets in case of emergency (or depletion of other assets) is very often a much greater factor in their decision making.
This is why people gravitate to MoneyGuard type products.
They can leverage their money to gain a much needed LTC benefit, and they get to keep control of their money, grow their money, and create an enhanced DB.
People dont care about ROP when they are fearful that the LTC premium will erode their retirement assets.
Also, with MoneyGuard, you get a residual DB even if you use up your LTC benefit.
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Statistically, is twice the benefit actually needed for the average LTC claim?
Is a minimum 7 year bucket of money not enough to cover most LTC claims??
If I remember correctly the average LTC claim lasts about 4 years.
An $800k+ bucket of money at age 75 is nothing to turn your nose up at either way. Especially when you still have control of MORE than what you paid into the policy.
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Its funny how Health agents who are supposedly trained in the insurance field dont understand very simple combo products; but clients with no insurance or financial training whatsoever have no problem understanding it at all when it is properly explained to them.....
The 10 year old grandson of a client of mine sat in on a MoneyGuard presentation a few months ago.
The 10 year old was able to understand the product....
It baffles me that an insurance agent claims this is a complicated product.
An HSA is more complicated than MoneyGuard.
But of course to understand it you would actually have to take the time to properly learn about the product.
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I totally agree with this statement.
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I used MoneyGuard as an example, which I am a fan of. JH has a good product too.
I am yet to be convinced that true LI with a LTC rider is a good deal for the consumer (even though my JH wholesaler tries desperately to convince me).
But this is a different product than a MoneyGuard type product.
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Reading these posts about the Lincoln Money Guard product made me take a long look at the product as well as some of the other LTC products out there. I think the products do look good on the surface and I can see a use for them. However in my opinion I think there is a potential problem down the road.
I don’t see these products being partnership qualified plans anytime soon and even though it is unlikely to be a problem I can still see scenarios were the insured could end up losing assets with the products that are not partnership qualified. When I look at buying a qualified LTC policy and taking the tax deductions that go along with it in combination of a fixed annuity there is not much difference in the price to take on the extra risk of the plans that are not partnership qualified.
I would love to hear others thoughts on this matter I’m sure someone is waiting to strongly disagree with me.
I don’t see these products being partnership qualified plans anytime soon and even though it is unlikely to be a problem I can still see scenarios were the insured could end up losing assets with the products that are not partnership qualified. When I look at buying a qualified LTC policy and taking the tax deductions that go along with it in combination of a fixed annuity there is not much difference in the price to take on the extra risk of the plans that are not partnership qualified.
I would love to hear others thoughts on this matter I’m sure someone is waiting to strongly disagree with me.
- 11,275
Partnership qualified plans are plans that you sell that you design to run out of money and the insured still needs care. When that happens, a certain amount of assets (equal to the pool of funds purchased through the policy) can remain untouched by your state medicaid program.
Partnership plans are DESIGNED to be affordable, but allow you to go to a medicaid facility and still keep assets.
What level of care do you want for your clients?
Sell enough protection so they don't GET to the medicaid facility. If you do this, then selling a "State Partnership plan" is moot.
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The whole idea behind state partnership plans is to help the STATE mitigate THEIR risk of uninsured people using up state resources.
So, if you help the state, they'll help you by not touching the pool of funds that you helped them buy.
As such, the insurance companies will pay for any level of care that is requested. You can sell a qualified partnership policy, but you only get the "benefits of partnership" if you run out of insurance money.
Why would you plan for failure like that for your clients?
And if they can't afford a great policy... should they be buying it at all? Each case is different, and the LTC agent must realize that LTC is a NICHE product - not necessarily appropriate for everybody.
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Keep in mind that many life insurance policies offer a critical illness-type rider for the terminally ill within the next 12 months. I know Ohio National allows access up to $250k of the death benefit under that rider. (That would pay for a lot of care within 1 year.)
It's not a LTC rider for long-term, multi-year, custodial care needs... but it's something. And it doesn't cost anything to add it to any policy that I've seen. Very small charges to access it in the event it is needed.
Partnership plans are DESIGNED to be affordable, but allow you to go to a medicaid facility and still keep assets.
What level of care do you want for your clients?
Sell enough protection so they don't GET to the medicaid facility. If you do this, then selling a "State Partnership plan" is moot.
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The whole idea behind state partnership plans is to help the STATE mitigate THEIR risk of uninsured people using up state resources.
So, if you help the state, they'll help you by not touching the pool of funds that you helped them buy.
As such, the insurance companies will pay for any level of care that is requested. You can sell a qualified partnership policy, but you only get the "benefits of partnership" if you run out of insurance money.
Why would you plan for failure like that for your clients?
And if they can't afford a great policy... should they be buying it at all? Each case is different, and the LTC agent must realize that LTC is a NICHE product - not necessarily appropriate for everybody.
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Keep in mind that many life insurance policies offer a critical illness-type rider for the terminally ill within the next 12 months. I know Ohio National allows access up to $250k of the death benefit under that rider. (That would pay for a lot of care within 1 year.)
It's not a LTC rider for long-term, multi-year, custodial care needs... but it's something. And it doesn't cost anything to add it to any policy that I've seen. Very small charges to access it in the event it is needed.
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