Hello, I'm new to the forum and saw your post from yesterday. I think you've heard of the Living Benefits policies that are out there, you need to look into National Life. She could open a Premium Deposit account that would provide over $200K in perm DB as well as money for long term care or disability...and of course if she doesn't claim on either she can pull cash back out of the policy down the road. Be Blessed!
Hybrid Life/LTC Policy Question?
- Thread starter term2u
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Tell her to keep the $100K in a safe investment and use the return on the investment to buy a good, traditional LTCi policy.
$350/year buys tons of LTC coverage... at least for a while until the premiums are raised. Then it buys just a little bit less!
$350/year buys tons of LTC coverage... at least for a while until the premiums are raised. Then it buys just a little bit less!
either you can't multiply or you have no idea where people can safely invest their money.
even an annuity pays more than 35 basis points.
it's not that hard to safely earn 3%.
that would generate $3,000/yr.
For a $3,000/yr premium she could get better LTC benefits than she's been quoted on the TLC policy (and, by the way, from a company that has never had any premium increases.)
But, if you want a guaranteed death benefit and a guaranteed premium tell her to NOT dump $100K into the tlc.
Tell her to buy a 20pay hybrid policy from State Life.
She'd get a guaranteed death benefit of $150,000 (unlike the tlc death benefit which decreases to just a little bit more than the original premium in the latter years of the policy.)
PLUS, she can get an unlimited amount of LTCi benefits.
Her 20 year premium would be $10,157.
When you calculate the nearly 3% she can earn on her $100K each year, she's much better off buying the 20pay with guaranteed benefits than she is the tlc product.
The single premium products are great for the insurers (and the agents) and lousy for the consumers IMHO.
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What is a premium deposit account ?
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term2u
Super Genius
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either you can't multiply or you have no idea where people can safely invest their money.
even an annuity pays more than 35 basis points.
it's not that hard to safely earn 3%.
that would generate $3,000/yr.
For a $3,000/yr premium she could get better LTC benefits than she's been quoted on the TLC policy (and, by the way, from a company that has never had any premium increases.)
But, if you want a guaranteed death benefit and a guaranteed premium tell her to NOT dump $100K into the tlc.
Tell her to buy a 20pay hybrid policy from State Life.
She'd get a guaranteed death benefit of $150,000 (unlike the tlc death benefit which decreases to just a little bit more than the original premium in the latter years of the policy.)
PLUS, she can get an unlimited amount of LTCi benefits.
Her 20 year premium would be $10,157.
When you calculate the nearly 3% she can earn on her $100K each year, she's much better off buying the 20pay with guaranteed benefits than she is the tlc product.
The single premium products are great for the insurers (and the agents) and lousy for the consumers IMHO.
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 Untitled-001.pdf
either you can't multiply or you have no idea where people can safely invest their money.
even an annuity pays more than 35 basis points.
it's not that hard to safely earn 3%.
that would generate $3,000/yr.
For a $3,000/yr premium she could get better LTC benefits than she's been quoted on the TLC policy (and, by the way, from a company that has never had any premium increases.)
But, if you want a guaranteed death benefit and a guaranteed premium tell her to NOT dump $100K into the tlc.
Tell her to buy a 20pay hybrid policy from State Life.
She'd get a guaranteed death benefit of $150,000 (unlike the tlc death benefit which decreases to just a little bit more than the original premium in the latter years of the policy.)
PLUS, she can get an unlimited amount of LTCi benefits.
Her 20 year premium would be $10,157.
When you calculate the nearly 3% she can earn on her $100K each year, she's much better off buying the 20pay with guaranteed benefits than she is the tlc product.
The single premium products are great for the insurers (and the agents) and lousy for the consumers IMHO.
I can get 3% from an annuity but for how long? And after tax what is her net take home amount, 2k?
So let's follow your first recommendation. She buys an annuity, takes 3k/yr out and nets 2k and buys an LTC policy with no guaranteed premium.
When her annuity guarantee ends you had better hope that rates are higher than today. That's the same hope savers had had for 8+ years but with no relief. But I guess in the future that will be different.
Then you had better hope that the company that hasn't raised it's premiums on LTC yet can still make that claim. In the face of all available historical data that is a bad bet. Companies that can raise there LTC premiums usually raise their LTC premiums but you can hope.
I think the second idea is much better since the opportunity cost of doing such a product is nearly zero sine interest rates are the same. However, i would be much more inclined to leave myself flexibility and have access to my cash should rates rise in the future so that I could reallocate that money to other places.
Locking myself into 20 premiums at that age wouldn't be appealing but perhaps others would chose to do so.
I would also challenge you on the assertion that she could get "unlimited amounts of LTCi benefits". If this were so how could my good friend continue to be employed by State Life in downtown Indianapolis? That's unlimited risk for limited premiums.
- 10,334
Mass Mutual and State Life
Yes, State Life's Life/LTC has an unlimited benefit period for long-term care benefits. No matter how long someone might need long-term care the policy can never run out of long-term care benefits.
It is true that most of the older LTCi policies have had large premium increases. But that doesn't matter. Policies purchased today are under different rules.
To protect consumers purchasing policies today, 41 states have passed strict pricing regulations. Consumers purchasing policies today are protected from the pricing mistakes of older policies and are protected by these new pricing regulations.
Here's a quote from an article published today:
A Different Environment for New Policies
New policies operate under a different set of regulations in most states, according to Scott Olson, co-founder of LTCShop.com in Yucaipa, Calif., and author of “The Guidebook for Making Long Term Care Insurance Easier.” While prospective buyers most likely have heard about and are concerned about LTCI rate increases, they probably don’t know that in more than 40 states insurers operate under strict rate-stability regulations that govern rate increases.
For an insurer to get a new LTCI policy approved in a state that has a rate-stability regulation, the insurer must provide actuarial certification that it doesn’t expect any rate increases on this new policy series, even under what’s called moderately adverse circumstances or experience, Olson explained. He quoted Alabama’s regulation as an illustration of the new pricing oversight: “An actuarial certification consisting of the following: A statement that the initial premium rate schedule is sufficient to cover anticipated costs under a moderately adverse experience and that the premium rate schedule is reasonably expected to be sustainable over the life of the form with no future premium increases anticipated.”
“So, even if claims are, for example, 20 percent higher than they projected, that’s not going to be enough to request a rate increase,” Olson said. “It’s a big deal. Nobody in the industry is explaining this to people and they should be.”
Olson cited the statistics on one insurer’s experience with rate-increase requests in California. The insurer has filed 40 requests since the state adopted rate-stability regulations in 2002; regulators denied all of the requests.
The combination of better policy pricing and rate-stability regulations is both good news and bad news for buyers, he pointed out: “The good news is that the more conservative pricing dramatically decreases the probability of a rate increase. Leading actuaries estimate that a policy purchased today under these rate-stability regulations has a 12 percent chance of having a rate increase over the life of the policyholder. The bad news is that the more conservative pricing means that policies cost more today than they did 10 years ago.”
You can read the article here:
Dealing with Rate Increases | Talk About LTC
