10 Pay or Lifetime Pay??

[gettingstarted]

I'm new to LTC, been doing Life/DI for a while, now have a great LTC product and am starting some quotes for some clients.

Do you favor the 10 pay or lifetime pay and why one or the other?

Thanks.

 

[BNTRS]

I'm new to LTC, been doing Life/DI for a while, now have a great LTC product and am starting some quotes for some clients.

Do you favor the 10 pay or lifetime pay and why one or the other?

Thanks.

10 pay is a lot cheaper, and if the client has the money to cover the entire 10 pay premium no waiver of premium necessary. If they don't and they be using income for 10 years, waiver is less expensive. If the money is there it makes sense to pay for it this way.

Some carriers also have paid until age 65 (not usually available after age 54), not as great but still potentially much less expensive.

 

[gettingstarted]

Gotcha, thanks for the reply. Client now has a John Hancock 10 Pay. It's setup with Lifetime Benefit Period and 10 Pay. It's a little much monthly for her, so I was looking at lifetime pay to cut monthly outlay. Also concerned because her daily benefit is $100 and cost is around $170 now...

 

[Newby]

If you were selling to yourself you would prefer a paid up policy to one you would have to pay forever wouldn't you?

 

[Graham]

It really comes down to can the client afford to pay the higher premium for a shorter time period. A-lot of that decision also hinges on the age of the client. I also see the 10 pay option taken by business owners who are doing an executive carve out for themselves. Have the business pay for it and write off the premium as a business expense then if you sell or retire you have a paid up "asset" in the LTC policy.

 

[pjack]

It really comes down to can the client afford to pay the higher premium for a shorter time period. A-lot of that decision also hinges on the age of the client. I also see the 10 pay option taken by business owners who are doing an executive carve out for themselves. Have the business pay for it and write off the premium as a business expense then if you sell or retire you have a paid up "asset" in the LTC policy.

I agree with Graham, it's not a 10 pay or Life pay decision. It's a decison, how much coverage does your client need, and what can she afford.

Personally I prefer to use the 10 pay for business clients, and lifetime pay for individual clients.

 

[jody108]

that is a good point

 

[BNTRS]

Gotcha, thanks for the reply. Client now has a John Hancock 10 Pay. It's setup with Lifetime Benefit Period and 10 Pay. It's a little much monthly for her, so I was looking at lifetime pay to cut monthly outlay. Also concerned because her daily benefit is $100 and cost is around $170 now...

No inflation rider? What kind of retirement income will she have? Replacements on LTC are tricky. I'd say benefit amount isn't the greatest place to look when considering a replacement. Is it an indemnity benefit? How old is she? How many years does she have left to pay? What is her premium? What state?

 

[gettingstarted]

Has inflation rider but starting at 100 when cost now is 160+ she will always be behind. No indemnity. She is 65. She's just 1 year in.
Premium is $552 monthly. TN

Edit: it's also set up for lifetime benefit period.

No inflation rider? What kind of retirement income will she have? Replacements on LTC are tricky. I'd say benefit amount isn't the greatest place to look when considering a replacement. Is it an indemnity benefit? How old is she? How many years does she have left to pay? What is her premium? What state?

 

[BNTRS]

Has inflation rider but starting at 100 when cost now is 160+ she will always be behind. No indemnity. She is 65. She's just 1 year in.
Premium is $552 monthly. TN

Edit: it's also set up for lifetime benefit period.

Ok, but 100 daily benefit may not be so bad if she has retirement income of $22,000 or more. The real downfall to this plan is no indemnity benefit. So it only reimburses her expenses. What happens if sometime in the future there is a new method to delivering long term care to an individual that isn't specified in her contract because it didn't exist when it was written?

If you are going lifetime pay she'll need waiver of premium, unless she really wants to pay premiums even when she's using the insurance (this would be weird).

Life time benefit I'd be careful about changing. Unless she is really open to medicaid planning. Even then, she'd need a fact pattern that say she absolutely will run out of money funding this any other way to make me want to entertain this option.