Traditional Annuity Vs WL W/ LTC Rider Vs Immediate, Medically-UW Annuity

[KenP]

I threw together a basic schedule of the type of clientele that would be more appropriate for which of the abovementioned LTC options based on my knowledge. I'm a licensed P&C agent but am learning everything I can about life and LTC, so feel free to tear this apart if I have some apparent gross misunderstandings

WL w/ LTC Rider​

• In good health and/or planning very far ahead
• Not much cash surplus currently; still building and saving
• No other (or very little) legacy to leave to heirs. The DB of this policy would be the largest by far
• No immediate or likely need for LTC but wants protection just in case
• Interested in cash value component as part of a larger investment portfolio. May need to access it before retirement stage hits
• Currently more concerned over legacy left to heirs than additional retirement income
• Generally speaking, the lower or middle income type of client

Traditional Deferred/Fixed Annuity​

• A little later in life but years from retirement, potentially some health concerns
• Has a chunk of cash available now -or-
• Has excess income to put into deferred and wants it tax-deferred
• Doesn't need access to cash until at least retirement
• Medium-term planning ahead
• Has other assets for legacy, has other investment contributions for legacy
• Wants additional retirement income stream if no ultimate need for LTC
• Generally speaking, the middle or higher income type of client

Immediate, Medically-Underwritten Annuity​

• Has health problems already
• Large cash chunk saved and allocated to be used for LTC or similar expenses, but is concerned over longevity risk
• Very likely to need LTC, very aware of this
• Crisis planning
• Plenty of other assets to leave as legacy
• Generally speaking, the high or very high income type of client

 

[Mr_Ed]

I threw together a basic schedule of the type of clientele that would be more appropriate for which of the abovementioned LTC options based on my knowledge. I'm a licensed P&C agent but am learning everything I can about life and LTC, so feel free to tear this apart if I have some apparent gross misunderstandings

WL w/ LTC Rider​

• In good health and/or planning very far ahead
• Not much cash surplus currently; still building and saving
• No other (or very little) legacy to leave to heirs. The DB of this policy would be the largest by far
• No immediate or likely need for LTC but wants protection just in case
• Interested in cash value component as part of a larger investment portfolio. May need to access it before retirement stage hits
• Currently more concerned over legacy left to heirs than additional retirement income
• Generally speaking, the lower or middle income type of client

Traditional Deferred/Fixed Annuity​

• A little later in life but years from retirement, potentially some health concerns
• Has a chunk of cash available now -or-
• Has excess income to put into deferred and wants it tax-deferred
• Doesn't need access to cash until at least retirement
• Medium-term planning ahead
• Has other assets for legacy, has other investment contributions for legacy
• Wants additional retirement income stream if no ultimate need for LTC
• Generally speaking, the middle or higher income type of client

Immediate, Medically-Underwritten Annuity​

• Has health problems already
• Large cash chunk saved and allocated to be used for LTC or similar expenses, but is concerned over longevity risk
• Very likely to need LTC, very aware of this
• Crisis planning
• Plenty of other assets to leave as legacy
• Generally speaking, the high or very high income type of client

is there a reason you left out traditional LTC insurance?

 

[ltcadviser]

is there a reason you left out traditional LTC insurance?

Why buy a car for transportation when you can buy a skateboard, a unicycle or a big wheel?

 

[DHK]

I'm not an expert in this area, but I think you'll find the attached helpful.

 

[Mr_Ed]

Why buy a car for transportation when you can buy a skateboard, a unicycle or a big wheel?

great point, Jack.

 

[KenP]

I got a kick out of your responses, guys. I see your point.

It was never really on my radar because the health/life/annuities guys rarely see any demand for the traditional LTCi anymore. Every time they put it on the table, one of the hybrids always gets chosen over traditional. And I've seen them give a fair shot to each; that's to say they aren't biased against traditional LTCi

 

[ltcadviser]

I got a kick out of your responses, guys. I see your point.

It was never really on my radar because the health/life/annuities guys rarely see any demand for the traditional LTCi anymore. Every time they put it on the table, one of the hybrids always gets chosen over traditional. And I've seen them give a fair shot to each; that's to say they aren't biased against traditional LTCi

Probably due to how it's "put on the table."
I do a boatload of linked benefit LTC business, but traditional LTC insurance will always work great.

 

[kpbdy99]

If the client's assets and circumstances fit, I'll always talk about both traditional LTC AND the hybrids, but my clients almost always still pick the traditional. It's just more efficient, if their real concern is paying for LTC.

 

[Mr_Ed]

If the client's assets and circumstances fit, I'll always talk about both traditional LTC AND the hybrids, but my clients almost always still pick the traditional. It's just more efficient, if their real concern is paying for LTC.

exactly!

if someone can qualify for traditional LTCi, it is always the better value for the consumer.

the only time someone should consider a hybrid is if they can't qualify for traditional LTCi.

 

[mplsmm]

Why buy a car for transportation when you can buy a skateboard, a unicycle or a big wheel?

I am not gonna lie, this made me giggle.