Combo Products a future trend?

[policy doctor]

I think a combo pkg has great appeal as compared to separate policies.

North American Life Plans

 

[James]

I think a combo pkg has great appeal as compared to separate policies.

North American Life Plans

For instance, a 65-year-old might pay a premium of $156,000 for $1,000 a month in income for life plus a monthly disability payment of at least $2,000 a month when needed, Murtaugh, Spillman and Warshawsky estimated in a 2001 study. They figured that as much as 98% of the population of the 65-year-olds could be able to pass the minimal underwriting and be eligible for the product.

I'm thinking this math simply doesn't work? If the recipient is recieving $1,000 a month in income or $12,000 a year that would be around 7-8%, and if needed the Carrier will double that amount? Yea, I see this happening!

 

[policy doctor]

well even if they did increase that amount they couldn't sustain that payout beyond 3-4 years without additional funding or double digit interest rates. But that would be available for ltc needs.

 

[James]

well even if they did increase that amount they couldn't sustain that payout beyond 3-4 years without additional funding or double digit interest rates. But that would be available for ltc needs.

Annuities pay around 3-4% on lifetime payments, they can not offer more unless you are paying more in. Simple as that, making this idea a non starter for most, most do not have hundred of thousands of dollars sitting around to fund LTCi, which this would obviously mandate. Now you can add in a certain premium amount dedicated to the LTCi pool, but then you would have a Annuity and a LTCi policy as a ryder. I think you would find it hard to meet up with a solid LTCi policy privately held along with SPIA's to fund retirement and the LTCi Policy. Tax assumption would be equal if not favoring the privately held LTCi policy not too mention the benefits being better with a stand alone LTCi policy, IMHO.

This paper you linked to is obviously written by a person with little knowledge of Annuities. Too even suggest a 7-8% payout is so beyond the pale it isn't worthy of consideration.