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Old 04-10-2017, 04:47 PM   #21
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Would be interested in all your views as to the disadvantages of this product. The main one I hear from some commentators is loss of earnings on the money. I would assume these dollars are lazy dollars and invested very conservative. What are some others as well as your "concept" initial conversation?
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Old 04-10-2017, 04:50 PM   #22
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Originally Posted by bluemarlin08 View Post
Would be interested in all your views as to the disadvantages of this product. The main one I hear from some commentators is loss of earnings on the money. I would assume these dollars are lazy dollars and invested very conservative. What are some others as well as your "concept" initial conversation?
there's only one disadvantage with a single pay product:

time value of money.

period.

and, in most cases, the opportunity cost each year of the single pay product is greater than the annual premium for a traditional product.
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Old 04-10-2017, 05:31 PM   #23
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Opportunity cost which has been mentioned; and asset-offset.
Benefit is fixed cost structure.

Traditional policy downside is rate increase risk.
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Old 04-10-2017, 05:55 PM   #24
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opportunity cost
Every time I hear that I always think of "LEAP" presentations. Just curious, what interest rate do you use when showing lost opportunity cost, 5, 7%?
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Last edited by bluemarlin08; 04-10-2017 at 06:21 PM.
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Old 04-11-2017, 05:30 AM   #25
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What Would You Suggest? Re: What Would You Suggest?
Originally Posted by ltcadviser View Post
Opportunity cost which has been mentioned; and asset-offset.
Benefit is fixed cost structure.

Traditional policy downside is rate increase risk.
Would you consider having no life ins death benefit in a traditional policy a downside also? Obviously its not a product designed for that, just curious on your thoughts.

Most people have a segment of assets that are invested very conservatively... this type product imo, falls into that area. So the lost opp cost is minimal, when looking at the total picture.
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Old 04-11-2017, 12:56 PM   #26
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Originally Posted by pfg1 View Post
Would you consider having no life ins death benefit in a traditional policy a downside also? Obviously its not a product designed for that, just curious on your thoughts.

Most people have a segment of assets that are invested very conservatively... this type product imo, falls into that area. So the lost opp cost is minimal, when looking at the total picture.
conservative investments are generally earmarked for emergencies. that is why they pay low interest rates because they are liquid with no risk. why put that money into an non-liquid "investment".

fyi... a single pay life/ltc policy is NOT an investment. it's very expensive life insurance.

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Originally Posted by ltcadviser View Post
Opportunity cost which has been mentioned; and asset-offset.
Benefit is fixed cost structure.

Traditional policy downside is rate increase risk.

the rate increase risk is very small and it's much smaller now than it was in the past.

the opportunity cost is certain.

a rate increase is not.

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Originally Posted by bluemarlin08 View Post
Every time I hear that I always think of "LEAP" presentations. Just curious, what interest rate do you use when showing lost opportunity cost, 5, 7%?
gimmeabreak.

I ask the client what they expect to earn on their $.

In most cases they say 3%.

It's very easy to beat any single pay product once your client understands the opportunity cost, whether you assume 2%, 3% or whatever percent.

the opportunity cost in the single pay products is huge.
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Old 04-11-2017, 01:53 PM   #27
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gimmeabreak.
About what? You never heard of "LEAP"?

You think a 3% lost opportunity cost is really all that significant for the potential LTC payout? We are talking Annuity/ LTC not Life/ LTC.
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Old 04-11-2017, 03:43 PM   #28
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Originally Posted by bluemarlin08 View Post
About what? You never heard of "LEAP"?

You think a 3% lost opportunity cost is really all that significant for the potential LTC payout? We are talking Annuity/ LTC not Life/ LTC.

My position is that traditional LTCi is a much better value than any single premium combo product (e.g. Annuity/LTC or Life/LTC).

If you could only earn 3% on the single premium you would be able to buy much better LTC benefits with the earnings than you'd get from the combo product.

Anyone who understands the opportunity cost of the single premium product would never recommend it over a traditional product (except when underwriting prevents someone from qualifying for a traditional product).
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Old 04-11-2017, 07:34 PM   #29
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Originally Posted by bluemarlin08 View Post
Every time I hear that I always think of "LEAP" presentations. Just curious, what interest rate do you use when showing lost opportunity cost, 5, 7%?
I do not use any interest rate. Just discuss the issue. Each client will view their own respective opportunity cost differently dependent upon their source of funds, individual investment allocation and historical returns. A lot of clients assume 0%, anyway. They are using money sitting in their bank.

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Originally Posted by pfg1 View Post
Would you consider having no life ins death benefit in a traditional policy a downside also? Obviously its not a product designed for that, just curious on your thoughts.
Not a downside, whatsoever.
It is not priced to include death benefit.

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Originally Posted by Mr_Ed View Post
My position is that traditional LTCi is a much better value than any single premium combo product

Anyone who understands the opportunity cost of the single premium product would never recommend it over a traditional product
Interesting stance. LIMRA market data is moving against you Scott, and has been moving against you for some time.


Last edited by ltcadviser; 04-11-2017 at 08:31 PM.
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Old 04-11-2017, 07:35 PM   #30
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What Would You Suggest? Re: What Would You Suggest?
Originally Posted by ltcadviser View Post
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Interesting stance. LIMRA market data is moving against you Scott, and has been moving against you for some time.


I've never used LIMRA market data to determine which policy is the best value for each client. And I've never been one to follow the crowd. The crowd is usually wrong.
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Last edited by Mr_Ed; 04-11-2017 at 07:56 PM.
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