Long Term Care Policy Vs Rider on Life Policy

[Justin Bilyj]

What's everyone's take here on the ltc riders popping up? Which situation have you felt that the rider is a better choice over having a policy, is it just limited income?
What's a good income level to utilize a rider that you have found?

Anyone ever have a client utilize an ltc rider yet? How was their experience?

I attached Mass' ltc rider and their policy cross-chart, also wanted to get anyone's opinion on their rider (or their policy) compared to other companies you may know or utilize in your practice.

That was a lot of questions, appreciate any feedback!

 

[Newby]

For my own personal LTC protection I will go with the life rider if I get a decent rate on the life insurance for the obvious reasons.

1. (the biggie) if I never go on claim, the premium wasn't wasted.

2. Being life (GUL) based, it won't have rate increases

3. I personally don't trust health insurance based LTC as a good value. It's too expensive when you weigh the chances of large future rate increases along with the chance that it will not be used. To buy a good policy with good compounding inflation riders is high enough but if it increases in the future (should never be allowed on that product) that's over the top. If you are going to buy a striped down policy (no inflation rider) then the life insurance option looks like the better choice for me as a consumer.

Since the LTC policies re based on a set/limited amount of benefit it should be required that they offer a guaranteed lifetime price. It's not an open ended claim OR rising health care costs like health insurance has to deal with. The LTC policy is only going to pay X-amount per year for X-number of years. It's a contained amount (even with the inflation riders). It should be a guaranteed premium.

That's my opinion.

 

[scagnt83]

Well this should be an interesting discussion....

Many of the LTCI gurus on here will say that the LTCI Riders are a waste...


Some of the early ones were not the most attractive.

These days there are some good options out there imo.


LFG & Mass have two of the best. They both offer Cola options on the benefit base. Include HHC. They are very comprehensive.

If a client needs a permanent life policy & LTCI, then it makes sense. And many clients with a need & means for LTCI have a need for permanent life insurance as well.


With the Rider, at least your spouse gets the DB if you dont use it in LTC needs. So it is an end of life ROP.


Also, not all LTCI Riders are on GULs.

LFGs "LifeEnhancement Rider" is available on their UL & IUL too.
Mass offers it on their traditional WL.
This mean you can use a policy with an Increasing DB. And that has usable CV.

In other words, you can offer a client LTCI benefits, plus cash access to premiums + gains, plus a DB.

It usually costs a bit more. But when you compare it to a ROP LTCI, plus a Permanent Life Policy for the difference, prices are similar depending on level of benefits. And the younger the prospect is the better the LI Rider seems to look.

But from what I have found LFG & Mass have two of the strongest LTCI riders out there.



North American is a good option to use for PI, just because they include a Critical Care Rider for free along with the standard AB rider.
The CC Rider accelerates 25% of the DB for LTC needs, each year, for up to 4 or 5 years if I remember correctly.
Obviously that is not as rich as LFG or Mass. But it is free, which makes it a strong reason to use NA for permanent life cases.

 

[Tahoe Ray]

Very few companies have a true LTC rider. If you read the fine print, most of the chronic illness riders out there have some real deficiencies.

First off, several of them require your condition to be permanent in order to get access to the money. Second, some have a calculation that reduce your DB on a discounted basis depending on when you take the acceleration.

Companies that actually sell long term care seem to have the purest riders (Hancock and Genworth are two examples).

Think about this from the carriers' perspective. No one seems to want to be in the LTC business and yet all of these companies with zero claims experience for LTC generously include these riders, sometimes free of cost?

It's not a bad option to have, just one that I wouldn't rely on to cover a primary need.

I would much rather see a client purchase a true LTC policy than a life policy with one of these riders (if we're trying to cover them for LTC), even with inevitable price increases. Having both (a standalone life and ltc policy) would be ideal.

 

[scagnt83]

Think about this from the carriers' perspective. No one seems to want to be in the LTC business and yet all of these companies with zero claims experience for LTC generously include these riders, sometimes free of cost?

Yeah but the free ones are usually just an advance of the DB. At least the one I mentioned.
So the Net amount at risk for the carrier does not change. Plus, life expectancy after a LTC need reduces dramatically. Imo, the way they see it, that money will be spent fairly soon anyways...

And the ones that are more comprehensive such as LFG or Mass, well, they are anything but free! lol.

I have a case right now that I considered LFGs rider. But the numbers for standalone LTCI seem to be working out a bit better for this case since my client doesnt have a large LI need.

 

[Tahoe Ray]

Yeah but the free ones are usually just an advance of the DB. At least the one I mentioned.
So the Net amount at risk for the carrier does not change. Plus, life expectancy after a LTC need reduces dramatically. Imo, the way they see it, that money will be spent fairly soon anyways...

And the ones that are more comprehensive such as LFG or Mass, well, they are anything but free! lol.

I have a case right now that I considered LFGs rider. But the numbers for standalone LTCI seem to be working out a bit better for this case since my client doesnt have a large LI need.

For some, it is less than the net amount at risk since they accelerate your DB faster than what you actually take out (like NA)....

 

[Arthur Rudnick]

Here's the main question:
Is your client looking for a LTC policy or is he/she looking for life insurance?
Two different concepts, serving 2 different purposes.

I find that most people in their 50s & 60s already have adequate life coverage. In order to purchase sufficient LTC coverage, a life DB has to be $100,000, $200,000 or more.

In many cases a hybrid policy (with good LTC coverage) will end up costing more than 2 separate policies.

If the money is there, LTC with a ROP might be the best choice.

Also, on hybrid policies, both life & LTC are underwritten, which could possibly cause a problem.

Keep in mind that hybrid policies are not Partnership qualified.

I have nothing against a hybrid policy as long as it serves the client's best interest.

 

[scagnt83]

For some, it is less than the net amount at risk since they accelerate your DB faster than what you actually take out (like NA)....

Good point, they do reap some admin fees there. Maybe this will become standard across the board in the future just like the normal AB rider which often comes with admin fees when used.

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I find that most people in their 50s & 60s already have adequate life coverage..

Seriously? In term or permanent? Big difference at that age.

The bulk of my life business is age 45-65. Lots of need in that area. Lots of soon to expire term policies. You are definitely missing opportunities to cross-sell.

If you look at studies around 40%-60% in that age category believe that they are under-insured for life insurance. And those studies are not looking at low income households.

Life Insurance planning isnt about now. It is about 10, 20, 30, and 40 years from now. And that age group is generally ill prepared for 20 or 30 years from now.

 

[Mr_Ed]

For my own personal LTC protection I will go with the life rider if I get a decent rate on the life insurance for the obvious reasons.

1. (the biggie) if I never go on claim, the premium wasn't wasted.

2. Being life (GUL) based, it won't have rate increases

3. I personally don't trust health insurance based LTC as a good value. It's too expensive when you weigh the chances of large future rate increases along with the chance that it will not be used. To buy a good policy with good compounding inflation riders is high enough but if it increases in the future (should never be allowed on that product) that's over the top. If you are going to buy a striped down policy (no inflation rider) then the life insurance option looks like the better choice for me as a consumer.

Since the LTC policies re based on a set/limited amount of benefit it should be required that they offer a guaranteed lifetime price. It's not an open ended claim OR rising health care costs like health insurance has to deal with. The LTC policy is only going to pay X-amount per year for X-number of years. It's a contained amount (even with the inflation riders). It should be a guaranteed premium.

That's my opinion.

why do you think that someone who buys an LTCi policy today has a high chance of "large future rate increases"?





mrsed

 

[yankee466]

why do you think that someone who buys an LTCi policy today has a high chance of "large future rate increases"?





mrsed[/QUOte

I would assume the obvious answer to Mr Ed's question that any uninformed poster would make would likely include some or all of the following:

It is because interest rates in this country "obviously" have a lot further to drop......and of course it is because insurance companies are inherently evil and out to only screw you, and actuaries really do not know when you will die.....and then there is the excuse that it will be a problem until Obama fixes the LTC industry like he is fixing the health insurance industry, ......and then there is the simple fact that history repeats!!!! Makes sense to me!!