Hybrid Life/LTC Policy Question?

[Mr_Ed]

What's the benefit amount for State Life? Yes they have a nice continuation of benefit rider but usually they have a fairly low benefit amount which some argue is more important.

when i ran the state life quote, I was using the same monthly benefit that was included in the tlc quote.

 

[term2u]

when i ran the state life quote, I was using the same monthly benefit that was included in the tlc quote.

Would you mind including the attachment, so that I could see it?

 

[Mr_Ed]

I'm interested to know which company has never had any premium increases?

Also, with the State Life product I thought the best way to fund it was with a lump sum, as that goes into an annuity, which purchases the WL policy? I'll have to check with State Life and clarify.

I always have a hard time understanding the way the State Life product works, especially the taxation and find that it's pretty complicated for the client to understand, but I guess I just need to do more research. I'm also going to take a look at Lincoln Moneyguard as well.

Lastly, I have also attached the Genworth TLC illustration, so that you can see the specifics. Thanks for everyone's help!View attachment 3095

The lump sum is the worst way to pay for a product like this.

After analyzing and pricing these "combo" policies for hundreds of people, here are a few insights I can add to the discussion:

The Life/LTC "combo" policies that require a large, single premium deposit, are rarely a good deal for the buyer for 3 main reasons:

1) The insurer keeps most of the investment earnings on the money. After deducting fees and expenses from the "credited interest rate", the growth in the cash value is negligible (usually between 0% and 1%).

2) When long-term care is needed, the insurer uses the single premium deposit to pay for the care first before using their own money.

3) Between the single premium deposit and what they have to contribute to the cost of their care, the buyer usually has to cover the full cost of his/her care for at least the first 24 months of care (sometimes longer).



The annuity product you're referring to is only used when someone has qualified money that they want to use to fund a Life/LTC policy.

The qualified money (e.g. IRA, 401k, 403b, etc..) is transferred into the annuity to avoid being hit with a huge tax bill.

Then, every year, 5% of the annuity is transferred into the Life/LTC policy and the Life/LTC policy is paid up after 20 years. The insured must pay income tax on the 5% of the annuity that is withdrawn each year.


P.S. I emailed the illustration to you.

 

[term2u]

The lump sum is the worst way to pay for a product like this.

After analyzing and pricing these "combo" policies for hundreds of people, here are a few insights I can add to the discussion:

The Life/LTC "combo" policies that require a large, single premium deposit, are rarely a good deal for the buyer for 3 main reasons:

1) The insurer keeps most of the investment earnings on the money. After deducting fees and expenses from the "credited interest rate", the growth in the cash value is negligible (usually between 0% and 1%).

2) When long-term care is needed, the insurer uses the single premium deposit to pay for the care first before using their own money.

3) Between the single premium deposit and what they have to contribute to the cost of their care, the buyer usually has to cover the full cost of his/her care for at least the first 24 months of care (sometimes longer).



The annuity product you're referring to is only used when someone has qualified money that they want to use to fund a Life/LTC policy.

The qualified money (e.g. IRA, 401k, 403b, etc..) is transferred into the annuity to avoid being hit with a huge tax bill.

Then, every year, 5% of the annuity is transferred into the Life/LTC policy and the Life/LTC policy is paid up after 20 years. The insured must pay income tax on the 5% of the annuity that is withdrawn each year.


P.S. I emailed the illustration to you.

Thanks for the info - I just sent you a reply with the comparison between the State Life 20 pay that you sent over, and the Genworth TLC with the $100k dump in that I initially posted. It may be good if we upload both illustrations on this thread, so that others can see them?

Here is the Genworth TLC illustration again -

 

[Mr_Ed]

Thanks for the info - I just sent you a reply with the comparison between the State Life 20 pay that you sent over, and the Genworth TLC with the $100k dump in that I initially posted. It may be good if we upload both illustrations on this thread, so that others can see them?

Here is the Genworth TLC illustration again -

Please re-read the illustration I sent to you.
You did not read it correctly.

The long-term care rider has an "lifetime/unlimited" benefit period.
It can never run out of LTC benefits.

Also, please review the death benefit in the TLC policy. It goes down considerably over time. The State Life death benefit does not go down.

Lastly, you need to consider the time value of money.
She's losing all the return on that $100K from day one.

 

[pfg1]

What is a premium deposit account ?

A premium deposit account is where the client dumps in a lump sum of money to the ins company, and the company bleeds the annual premiums out of it yearly. So it acts as a single pay, but in reality it could be many years.

So if a client wanted to do a 10pay @ $5k/yr, they could dump in the $50k at one time, and the company pays the annual premium payments due each year out of that account. They also pay the client a small amount of interest on the money sitting in the account each year. Most int rate are low right now, 1-2%, and it is taxable.

IMO, this is really only a good fit if you have a client that is likely to blow the $ if they have access to it. Then they don't have the premiums for the ins policy. If they dump it in to the company, they know their policy premiums will be paid.

The other advantage of this, the policy avoids being a MEC. Not that a MEC is necessarily bad, but in most cases a true single pay is a MEC day 1.

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Mr. Ed, can you post State life quote? I'd like to see how that looks. Sounds interesting. Thanks

 

[aclaro]

I prefer structured cash flow to the premium deposit...lot better rates.