- 456
Insurance Forums Staff submitted a new article
Interest in life combo products spikes
Interest in life combo products spikes
Continue reading the Original Article.
Interest in life combo products spikes
- Thread starter Insurance Forums Staff
- Start date
I participate in a few consumer forums (mostly about Medicare) but someone asked about these combo plans.
I call them Swiss Army Knife because they are supposed to cover almost anything. My impression is they don't really live up to the hype, but I am not an LTC guy so I really don't know.
Someone (agent) mentioned the underwriting is more lax vs a straight LTC policy, so a person could be declined for LTC insurance but approved for a combo plan.
True or false?
It is my perception that the policy language in a combo plan might be more strict vs a straight LTC policy. In other words, the LTC policy might honor a claim that is denied by a combo plan.
Is the LTC benefit baked into the policy or added as a rider? Does the normal 2 yr contestable period for life also track the LTC benefit?
I probably have more questions but this is a start.
I call them Swiss Army Knife because they are supposed to cover almost anything. My impression is they don't really live up to the hype, but I am not an LTC guy so I really don't know.
Someone (agent) mentioned the underwriting is more lax vs a straight LTC policy, so a person could be declined for LTC insurance but approved for a combo plan.
True or false?
It is my perception that the policy language in a combo plan might be more strict vs a straight LTC policy. In other words, the LTC policy might honor a claim that is denied by a combo plan.
Is the LTC benefit baked into the policy or added as a rider? Does the normal 2 yr contestable period for life also track the LTC benefit?
I probably have more questions but this is a start.
Bob,
Underwriting can be easier, can be harder. Depends on the specific applicant’s health history and the specific underwriter.
The benefit triggers are the same with all policies, traditional and hybrid, that adhere to IRC 7702(b)
There is a 2 year period to contest a claim.
The riders are:
Acceleration of Death Benefit
Extension of Benefit
Inflation Protection
There are some very good policies available today.
- 10,328
Bob, generally speaking, the hybrid products are the wave of the future in LTC protection. As Jack pointed out, benefit triggers are the same if the policy falls under 7702(b).
But understand that there are different "combo plans" out there.
Some are designed to mimic traditional LTCI coverage as much as possible, such as LFGs MoneyGuard. The underwriting on these is very similar to traditional LTCI. Its essentially a UL chassis, but the benefits are focused on LTC and provide a seperate benefit pool for the LTC benefits. The focus is not the DB/CV.
Then there are Life Policies that are a life policy first, and LTC protection second. Some of these fall under 7702, others do not. Some of these use a separate benefit pool, others use the DB. Some of these charge extra for the LTC/Chronic Rider, others do not.
The main danger is if the impairments are required to be "permanent" or not. Most LTC claims are not for the rest of ones life, especially initial claims. But many non 7702 policies require the impairment to be permanent for the rest of their life, per doctors expectations. That provision excludes many possible LTC claims.
All 7702 policies do not require the impairments to be permanent. But with the others you have to read the details. More and more life carriers are removing the requirement of permanent impairment. But most non 7702 policies still require it.
So if you give just 1 piece of advice to people considering this, tell them to make sure permanent impairment is not required for claims to be paid.
But understand that there are different "combo plans" out there.
Some are designed to mimic traditional LTCI coverage as much as possible, such as LFGs MoneyGuard. The underwriting on these is very similar to traditional LTCI. Its essentially a UL chassis, but the benefits are focused on LTC and provide a seperate benefit pool for the LTC benefits. The focus is not the DB/CV.
Then there are Life Policies that are a life policy first, and LTC protection second. Some of these fall under 7702, others do not. Some of these use a separate benefit pool, others use the DB. Some of these charge extra for the LTC/Chronic Rider, others do not.
The main danger is if the impairments are required to be "permanent" or not. Most LTC claims are not for the rest of ones life, especially initial claims. But many non 7702 policies require the impairment to be permanent for the rest of their life, per doctors expectations. That provision excludes many possible LTC claims.
All 7702 policies do not require the impairments to be permanent. But with the others you have to read the details. More and more life carriers are removing the requirement of permanent impairment. But most non 7702 policies still require it.
So if you give just 1 piece of advice to people considering this, tell them to make sure permanent impairment is not required for claims to be paid.
- 4,570
i hear a lot of agents & even wholesalers use this swiss army knife terminology & many times the agent & client dont realize that the more they use 1 of the tools on the swiss army knife, they are also wearing down or eliminating the other tools in the swiss army knife. I hear agents sometime say you can use your hybrid accelerated death benefit for LTC costs & for death benefit & for supplemental retirement. That really isnt an accurate depiction as it is more fair to say "or" not "and". If I take distributions in my 60s to supplement retirement, I am also reducing the not only the cash value but also the death benefit & the Accelerated Death benefit for Chronic Illness. It wont be there for "LTC type expenses" if I have emptied the benefit from over using the other tools in the swiss army knife.
Thanks for the info.
Years ago I wrote life insurance, annuities and DI but that was not my primary focus. As each of these lines became more complicated I realized there was a need for me to decide what I wanted to be when I grew up. Those 3 lines, and later the LTC market, are (to me at least) extremely complicated. An agent can quickly find themselves in over their head and make a big mess of it.
When someone asks for a life insurance quote, I will only quote term, standard rates. No funny stuff. No guessing if the person is preferred, super-preferred or immortal.
Perhaps that is why I have not taken an application in probably a dozen years.
When CI policies first came on the scene most were in fact term life insurance with a CI rider.
And most, or at least the ones I saw, were garbage. Lot's of weasel language that would allow them to deny a claim. If they did pay a claim the DB was reduced by an equal amount.
If the policy covered heart, cancer, stroke and you had a "qualifying" stroke the claim was paid (lump sum) and the CI rider was terminated.
I really saw a need for CI but most were life policies that COULD result in the claim benefit being taxable. One carrier (Omaha??) had a true CI plan on a health insurance chassis. Great product (at least I thought so) but it was hard to compete with CI on a life chassis because the MOO premium was so much higher.
Underwriting was challenging including having the agent collect a specimen at POS.
Thanks @Allen Trent , @scagnt83 and @ltcadviser for your input. Just a few reasons why this forum is such a great resource for agents who are not afraid to ask and willing to learn from the masters.
Bob,
LTC is so easy. In comparison, Medicare supplement and Medicare advantage plans, that stuff is complicated
MA plans are complicated and a PITA. That's why I stick with Medigap, the simple stuff.
Most of my sales have a short gestation period, 60 days or less and most are not underwritten. Low . . . hanging . . . fruit . . .
Plus I don't have a $50,000 website like you do . . .
But thanks for all the feedback!
Similar threads
