10 Pay or Lifetime Pay??

[Newby]

I would think getting the daily benefit up would come before the waiver of premium rider. Paying $2000 or so per year in premium is fine when compared to paying the full nursing home payment.

 

[gettingstarted]

Do you mean you wouldn't change this to 10 year or 6 other,that you would leave it at lifetime??

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.

 

[bluemarlin08]

Most LTC policies have waiver built in to the policy. I would look at all the options, increasing daily benefit and reducing the lifetime benefit.

 

[BNTRS]

Do you mean you wouldn't change this to 10 year or 6 other,that you would leave it at lifetime??

What happens if she outlives the benefit period?
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I would think getting the daily benefit up would come before the waiver of premium rider. Paying $2000 or so per year in premium is fine when compared to paying the full nursing home payment.

This all depends on her fact pattern. Does she work? Where does the money come from to pay this premium? Will it be there forever? Since LTC premium rates aren't guaranteed do you want to gamble on the the possibility of it rising and the insured already on claim having to lapse the policy.
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Most LTC policies have waiver built in to the policy. I would look at all the options, increasing daily benefit and reducing the lifetime benefit.

No they really don't mostly have waiver built in.

 

[Newby]

When I sell LTC the first thing I'm going for is a realistic daily benefit. Currently $175 per day is realistic in my area. The 2nd is 5% compounded inflation.
I show them quotes for that on 3, 5 and lifetime.
That is the starting point for the sale. Then we go over each rider individually.
In my opinion a realistic 3 or 5 year policy ismore helpful in more cases than a lifetime that is too small and has features such as waiver of premium.
This is even more true in states where there is a state partnership program.

 

[BNTRS]

When I sell LTC the first thing I'm going for is a realistic daily benefit. Currently $175 per day is realistic in my area. The 2nd is 5% compounded inflation.
I show them quotes for that on 3, 5 and lifetime.
That is the starting point for the sale. Then we go over each rider individually.
In my opinion a realistic 3 or 5 year policy ismore helpful in more cases than a lifetime that is too small and has features such as waiver of premium.
This is even more true in states where there is a state partnership program.

And for people without significant assets this isn't a bad approach. However, the aberage 65 year old women doesn't usually end up with a 10 pay costing her 500+ bucks a month. My guess is either she has assets, or she ended up with a bad agent in the past.

The partnership plan works realatively well for people who maybe have a retirement account and a house. Medicaid planning can help them move the assets. Mathematically your approach is sound, but as you and I both know emotion plays a much larger role in the equation than logic. And even tough it's applicable to people wealthier people, I've never had luck getting them interested in such an idea.

By all means I've had the conversation with people about LTC that more closely shadows the higher benefit limit pay out idea. They don't have tons of money and never will, but they aren't lining up for food stamps and don't really want all their money to disapear just because they needed long term care.

 

[Newby]

I don't sell lots of LTC policies. But the ones I have sold have all had substancial assets. I can't imagine too many lower income or low asset people buying LTC insurance.

I have ran across people with little to no assets owning policies they bought several years ago for $30 to $50 daily benefit with no inflation riders. They are struggleing with the premium and I can't imagine how this policy will actually help them. Some would probably qualify for Medicaid before the benefit even kicks in and once it does it will be $100 or more per day short.

 

[bluemarlin08]

My best LTC clients are wealthy, 5 - 15 million net worth, makes lots of sense. Just sold a referral from a divorce attorney a 250 per day lifetime with compound inf, he and wife splitting up, nobody to take care of him, likes the idea of a care co ordinator that many policies offer, that was one of his main hot points. Net worth 17 mill, before the pie gets cut.

 

[gettingstarted]

Not sure if she is average but she has roughly 1.5 up net worth, no debt. Her "advisor" duped her into a REIT that she can't get any money out of and her monthly payout has went from $1600 to $400 on it. But that's another story...

I just want to do what's best for her - she had a mother who blew through $500k in about 9 years....

What would be your recommendation, from your posts I can't really tell - it seems you are back and forth.

And for people without significant assets this isn't a bad approach. However, the aberage 65 year old women doesn't usually end up with a 10 pay costing her 500+ bucks a month. My guess is either she has assets, or she ended up with a bad agent in the past.

The partnership plan works realatively well for people who maybe have a retirement account and a house. Medicaid planning can help them move the assets. Mathematically your approach is sound, but as you and I both know emotion plays a much larger role in the equation than logic. And even tough it's applicable to people wealthier people, I've never had luck getting them interested in such an idea.

By all means I've had the conversation with people about LTC that more closely shadows the higher benefit limit pay out idea. They don't have tons of money and never will, but they aren't lining up for food stamps and don't really want all their money to disapear just because they needed long term care.

 

[BNTRS]

Is she still working? Of the 1.5 how much is in the REIT? Where is the rest of it?