Holy Genworth Rates!

[ltcadviser]

But think about the couple you mentioned in your first post. How much would they need to deposit in MG to get the same benefit? Im not on my laptop right now so I have no illustration software, but I would guess around $200k?

They could fund the $3500/y traditional policy with less than $150k via a fixed annuity... I would probably do the full $150k just to put some premium increase protection in there.

They would need $145000-$155000 depending upon vesting choices with Lincoln MG.

So, they could fund the traditional policy for 2.5% of principal and assume rate increase risk on the traditional policy; or buy the hybrid and assume rising interest rate risk; inflationary risk etc.

I think it is a hard decision for 50 year olds to tie up assets for 30-40 years.

 

[Mr_Ed]

They would need $145000-$155000 depending upon vesting choices with Lincoln MG.

So, they could fund the traditional policy for 2.5% of principal and assume rate increase risk on the traditional policy; or buy the hybrid and assume rising interest rate risk; inflationary risk etc.

I think it is a hard decision for 50 year olds to tie up assets for 30-40 years.

that's why the lifepay ac4 is better.

 

[ltcadviser]

that's why the lifepay ac4 is better.

Meh. Most of my clients doing State Life Asset Care are much older than early 50's. And they are high net worth clients. $3Mil, $5Mil, 10Mil. Typically single Pay, although I have a few 10 Pays in UW now. The benefits are reduced on the 10 pay due to the time value of money, so many buyers still prefer single pay.

My personal clients have yet to opt for life pay on Asset Care.

 

[scagnt83]

They would need $145000-$155000 depending upon vesting choices with Lincoln MG.

So, they could fund the traditional policy for 2.5% of principal and assume rate increase risk on the traditional policy; or buy the hybrid and assume rising interest rate risk; inflationary risk etc.

I think it is a hard decision for 50 year olds to tie up assets for 30-40 years.

I agree. That is why the self funded route makes more sense. They are not locked into MG for life.

5 years down the road when the annuity is out of surrender they can drop the LTCI if they want and cash out the annuity.

Or if their other retirement assets create enough cash flow to cover the premiums they can take the annuity money and put it to other uses.

Of course they could cash out their MG if they want. But they will have no gains at all. And it does not give them the option to use those assets later in life AND keep the LTCI.

But at 51 both MG and the Annuity funding would be a hard sell. Not to mention the pesky little 59.5 rule (you could always just account for it but the extra 10% hit sucks). But I was just using it as a general example. It still works at age 60. My point is that MG puts your funds to sleep. At least cash flowing with an annuity gives your money the opportunity for growth.

I have presented the 2 side by side multiple times. The prospects I talked to actually were willing to put more into the annuity vs. MG because they see more value in that solution.

 

[Mr_Ed]

I agree. That is why the self funded route makes more sense. They are not locked into MG for life.

5 years down the road when the annuity is out of surrender they can drop the LTCI if they want and cash out the annuity.

Or if their other retirement assets create enough cash flow to cover the premiums they can take the annuity money and put it to other uses.

Of course they could cash out their MG if they want. But they will have no gains at all. And it does not give them the option to use those assets later in life AND keep the LTCI.

But at 51 both MG and the Annuity funding would be a hard sell. Not to mention the pesky little 59.5 rule (you could always just account for it but the extra 10% hit sucks). But I was just using it as a general example. It still works at age 60. My point is that MG puts your funds to sleep. At least cash flowing with an annuity gives your money the opportunity for growth.

I have presented the 2 side by side multiple times. The prospects I talked to actually were willing to put more into the annuity vs. MG because they see more value in that solution.

why not just do a 1035 exchange each year between the spda and the ltci policy then you don't have to worry about the 59.5 rule--assuming the annuity company will follow the PPA and not issue a 1099 for the gain and re-calculate the cost basis appropriately.

 

[jmhalvo]

I heard the same thing... we will see. But idk why... they have the best LTCI Rider on the market on their WL. You can even put it on the 10 and 20 pay WL... they need to push it more, no one in the industry seems to know about it other than career MM agents. ---------- That is because the majority of FAs do not understand insurance. Also, there are so many subsects of FAs... but the vast majority concentrate on Asset Management (aka investing in the market). But when you get into the guys who specialize more in the planning side and not the portfolio management side, they understand insurance a lot more. And are a lot more open to traditional LTCI. The average FA would have no clue how to go over the features of a LTCI policy. But MG is easy to sell. You basically have 2 columns to go over with a client... the accumulation column... and the LTC benefit column... The positioning of the product is just more natural for their sales process. Positioning LTCI, or even more so, positioning LTCI & creating the cash flow to fund it, is not a natural thing for most FAs. Very few concentrate on cash flow management. But think about the couple you mentioned in your first post. How much would they need to deposit in MG to get the same benefit? Im not on my laptop right now so I have no illustration software, but I would guess around $200k? They could fund the $3500/y traditional policy with less than $150k via a fixed annuity... I would probably do the full $150k just to put some premium increase protection in there. With that method they are basically doing the same thing as MG. Except they get: 1. A true traditional LTCI policy 2. The lump sum will actually grow until the premiums catch up to the interest earned (if they ever do). 3. Much better access to your money if you need it. 4. Much better flexibility 5. Ability to benefit from higher interest rates in the future (which MG locks the client into the current historically low rate environment) FAs do not think of the above scenario because a LTCI sale to them is ancillary. It is not what they do. It is not what they think about. But when shown solutions like the one above you better believe they opt for it over MG any day....

what about TLC? A 65 year old can turn 75k into a nice 6 yr LTCi benefit

 

[ltcadviser]

what about TLC? A 65 year old can turn 75k into a nice 6 yr LTCi benefit

What about TLC? Same analysis as MG or AC.

 

[jmhalvo]

What about TLC? Same analysis as MG or AC.

.....................

 

[Mr_Ed]

Health Guy, thanks for trolling. Have fun with trolling. You troll.

he's just bummed that his renewals aren't six figures like ours.

 

[HealthGuy]

Mr. Ed you are a funny guy ! 100K renewals ha ha