Article Suggests Moving CDs into LTC

[scagnt83]

Tyler, how many times a day do you refer to "putting money to sleep" whenever you speak of single premium hybrids? Think of another sales line. Please.

Look at the numbers, they dont lie. Call it what you want. The statement is the truth.

And talk about bias.... I actually show both options... and I dont use that line with clients, just agents who should be able to see it themselves. I know agents who sell SL and do not deny that "line" one bit!!

Again, the product can be perfectly suitable. But there are often better options from an economic standpoint. But that does not mean that the client will understand/like/want those other options.

 

[ltcadviser]

Did you miss where I said it is about doing whats best for the client?

And you are looking at this from your own personal paradigm. What I am talking about IS a single premium option! Just because it uses a traditional policy does not make it an extended pay option.


Show the 2 options side by side and see how few SL policies you sell. They are BOTH single pay options in the solution I mentioned. One puts money to sleep, the other doesnt. Let the client decide what they think is best... since its all about the clients...

----------



Now its my turn to call bs....

Yes they have the rate increase risk. But it would have to be over a 40% increase for my scenario not to work out better from an economic standpoint...

jmo

John Hancock greased my mom for 70% increase on her policy. 40% would have been welcome.

And who knows what additional rate increases will be forthcoming. So give me a break.

 

[scagnt83]

John Hancock greased my mom for 70% increase on her policy. 40% would have been welcome.

And who knows what additional rate increases will be forthcoming. So give me a break.

There is a Mr. Ed joke somewhere in that post...

 

[1reason]

There's a huge difference.

The LTC benefits in a life/ltc combo product with a single premium of $100K would cost about $2,000/yr NOT $5,000 per year.

Therefore, I can get comparable LTC benefits for only $40,000 in premium over the next 20 years, NOT $100,000.

That $40,000 in premium that I pay over the next 20 years has a present value of about $20,000. So, now I'm getting the same LTC coverage for 1/5th of the cost of the combo product.

Keep the $100K yourself. Invest it in something safe that will generate 2% or 3% every year. Use that earnings to buy equal or better ltc coverage than the life/ltc product. Your beneficiary gets the $100K when you die.


With the combo product you lose your deposit AND you lose the earnings you could have made on it.

I'm sorry, but you can't find a "safe" investment that will pay 3% after tax return. At least from the standpoint of guaranteed safe, and you can exit at any point with all your money or more back. But let's say you can, if you need to use it for LTC, there isn't a better non-insurance product available.

Also, who do you think is buying a single premium product that is funded from money sitting in a CD at the bank that is only there until they pass? Not typically someone expecting to pay for LTC over the next 20 years.

But you still can't get around the elephant in the room that someone doesn't need to think they will need LTC in order for this to make sense, whereas your plan requires it.

 

[Mr_Ed]

I'm sorry, but you can't find a "safe" investment that will pay 3% after tax return. At least from the standpoint of guaranteed safe, and you can exit at any point with all your money or more back. But let's say you can, if you need to use it for LTC, there isn't a better non-insurance product available.

Also, who do you think is buying a single premium product that is funded from money sitting in a CD at the bank that is only there until they pass? Not typically someone expecting to pay for LTC over the next 20 years.

But you still can't get around the elephant in the room that someone doesn't need to think they will need LTC in order for this to make sense, whereas your plan requires it.

most of the single premium combo products have LOUSY LTC benefits.

it's that simple.

when someone buys a single premium combo product:

they pay more
they retain more of the risk
AND
they get LESS LTCi benefits than even a dirt cheap LTCi policy would give them.

 

[ltcadviser]

most of the single premium combo products have LOUSY LTC benefits.

it's that simple.

So, Scott, just focus on the hybrid policies that have excellent benefits. It is that simple.

 

[scagnt83]

I'm sorry, but you can't find a "safe" investment that will pay 3% after tax return.

10 year Fixed Annuities pay over 3%. There are plenty of AAA bonds out there that pay over that. Then there are bond funds that consistently average that and are totally liquid.

I dont care what way you go about it. If they need LTC or if they dont need LTC, either way the alternative suggested provides more money both in life and at death. Once a client sees the numbers many understand.

----------

So, Scott, just focus on the hybrid policies that have excellent benefits. It is that simple.

Show me one that provides a better LTCI benefit and more money vs. my option then I will change my mind.


The real issue for many of these clients is the lump sum stuck in CDs earning next to nothing. Once they see alternatives often the single premium hybrid suddenly does not look so great to them. They take the hybrid option because to them it is a wash on earnings and they know of no alternatives.

 

[ltcadviser]

10 year Fixed Annuities pay over 3%. There are plenty of AAA bonds out there that pay over that. Then there are bond funds that consistently average that and are totally liquid.

I dont care what way you go about it. If they need LTC or if they dont need LTC, either way the alternative suggested provides more money both in life and at death. Once a client sees the numbers many understand.

----------



Show me one that provides a better LTCI benefit and more money vs. my option then I will change my mind.


The real issue for many of these clients is the lump sum stuck in CDs earning next to nothing. Once they see alternatives often the single premium hybrid suddenly does not look so great to them. They take the hybrid option because to them it is a wash on earnings and they know of no alternatives.

When I was younger and even more over-analytical than I am today, I would have agreed with you, Tyler. But the 50%-100% rate increases have enlightened me. And I have learned consumers hate complicated processes and will not apply for SPIAs, GULs and LTC policies just to squeeze out more return. The only result is paralysis by analysis which serves no purpose.

 

[Justin Bilyj]

If you need to make a big claim, the insurance company will use your $100,000 deposit first, then if the claim is over $100,000, the insurer will pay their money to repair/replace your home but no more than $200,000 over your deposit.

Of course, in the event of a big claim, your heirs won't get any money from this policy.


Who in the world would buy such a policy?
No one would. It doesn't make sense.
Yet, the probability of needing LTC is so much greater than needing to make a claim on one's homeowner's policy.

That was a great analogy......

 

[scagnt83]

When I was younger and even more over-analytical than I am today, I would have agreed with you, Tyler. But the 50%-100% rate increases have enlightened me. And I have learned consumers hate complicated processes and will not apply for SPIAs, GULs and LTC policies just to squeeze out more return. The only result is paralysis by analysis which serves no purpose.

I cant argue that consumers want simplicity. At the end of the day the smart agents sells what the consumer is willing to buy.


And in a roundabout way did you just call me young and foolish???