a dividend rate is not the same as the investment return on a general account.
the dividend rate is determined primarily by profits generated by underwriting, not investment returns.
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- Thread starter ltcadviser
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a dividend rate is not the same as the investment return on a general account.
the dividend rate is determined primarily by profits generated by underwriting, not investment returns.
- 10,330
I did not say it is the same. I said that it is based on the General Account Performance.
So if a policy pays a 7.1% Dividend, the GA is most likely returning more than that %.
And technically we are both correct. Dividends are a share of the "Divisible Surplus" of the carrier.
According to the major Mutuals; the Divisible Surplus is based on Investment Performance, Mortality Experience, & Expenses.
BUT, Mortality Experience is fairly predictable in life insurance. And expenses do not vary all that much year to year from a % basis. So the largest variable in the making of a Dividend is the performance of the General Account.... hence the reason I made the statement that I did.
Yeah. I framed it wrong in my comment. Isn't the custom plan one which essentially you can choose what level of inflation protection you wish each year and your premium adjusts accordingly.
I haven't run into anyone in which the Custom plan makes any sense over the Secure so I really don't get into it.
The new Hancock plan really looks like a tough sell btw. Too many questions can come up in which the answer is to trust the insurance carrier.
It sounds like you are very confused as to how the two MOO plans work. IMHO, the Custom plan is the only plan you should sell from MOO, unless you want to shave a few pennies.
I'm all ears on the Custom plan. Why would I sell the Custom plan over the Secure plan? I ask the question sincerely rather than from the angle this board too often takes in a "I know more than you" fashion. Maybe I won't be the only one who'll learn something. Thx.
more flexibility in policy design.
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- #67
Well, for some clients (a lot, really) the customization and the cash alternative benefit increased to 40 % are not important. So Secure Solutions is more than adequate.
- 15,041
a dividend rate is not the same as the investment return on a general account.
the dividend rate is determined primarily by profits generated by underwriting, not investment returns.
One of the few times I agree with you.
Conservative pricing and underwriting are just as important to the dividend as investment return.
well......there are certainly some people on this board that know more than everyone else, and are not afraid to make that clear.
Else.......to answer your question, they are both quality, and fundamentally the same product. As the name "custom" implies....Custom is simply far more customizable than Secure.
At a high level, and not necessarily complete, the Custom product offers:
1. Infinitely configurable inflation options, with the option of increasing the inflation option in the future without UW. This can be important if you have a client who wants to lock in their health now, and maybe throw more money at it later and have it grow faster. You can also limit the inflation period to 10/15/20 years to control costs...and may be good for older clients. Secure only has X20 year cutoffs. If the client has a price target, you can hit it easier with the inflation increments if you like.
2. 40% versus 30% for cash option
3. Can add joint waiver of premium if you like
4. Can add survivorship if you like
5. to Age 65 Rop is available if you like
6. "Double" benefit for HHC for "professional home care" is cheap and interesting if you think you may ever need more OT/PT/Skilled nursing at home than Medicare will provide,,,and with Medicare going broke, maybe not such a bad idea.
7. Way more elimination period options than Secure
Else, if all you need to good fundamental coverage, Secure is a little cheaper.....but only a little cheaper in most cases...and since most of my clients like flexibility, and the majority of LTC claims start out in the home with family member care, the 40% cash seems to resonate better than 30% when the costs are virtually identical. 100% would be nice, ala Medamerica....but we take what we can get.
Else, as an agent, it is best to present what you are most comfortable presenting....but a good agent should know all the options to do what is best for the client. Personally, I start with what I believe to be the better product, and will scale back as needed if budgets are tight. How you do your business is up to you. You can also make the argument that the more options you have, the harder it is for the client to decide what to do.....so maybe simpler is actually better.
For the sake of providing the flippant answer my former IBM manager always used to give me....you could always "read the book". The brochures are rather clear....and all the options are in the single application. Even Straticision gives you the basic details of both products under "product help"..so I would suggest you just run some sample illustrations for both and decide for yourself.
Hope this helps a little.
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- #70
Sometimes clients like the dual waiver of premium benefit; sometimes clients want a longer benefit period than 5 years; or want survivorship benefits. So, as Herman and Scott have said there are a number of reasons why you might pivot to it. I use it expressly when my clients request certain benefits that it offers; otherwise, Secure Solutions is a very fine policy.
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And you would be correct with your thinking.
