Join David McKnight and I to discuss his book "The Guru Gap"!

[LostDollar]

That sounds like the non underwritten, no annual cost version of Chronic illness that underwrites/estimates the life expectancy at claim time & then discounts the the death benefit greater than the actual claim amount requested

That comment, coupled with a discrepancy in two sections of the book about annuity fees and products for lifetime income, suggest to me that there may be some glossed over fine points in his retirement planning approach which one needs to become aware of and understand better.

 

[Allen Trent]

That comment, coupled with a discrepancy in two sections of the book about annuity fees and products for lifetime income, suggest to me that there may be some glossed over fine points in his retirement planning approach which one needs to become aware of and understand better.

a lot of those books are written with the agent as the target reader or if written for consumer in mind after it is promoted to consumer from an agent, it is likely intended to be the general high level details as getting into nitty gritty details isnt easily done with policy/contract details varying by carrier, etc

 

[LostDollar]

a lot of those books are written with the agent as the target reader or if written for consumer in mind after it is promoted to consumer from an agent, it is likely intended to be the general high level details as getting into nitty gritty details isnt easily done with policy/contract details varying by carrier, etc

the podcast with DHK suggested to me that this book was written for "power of zero" agents to "buy by the case" and use with clients.

I do not understand SPIA'S or how to find and compare their rates to income riders. I have learned enough about FIA's with income riders to make a purchase.

Given that one of the significant purposes of THe Guru Gap seems to be to establish some criticisms of some leading financial advisors approaches to retirement planning, I am very surprised that the author, the editor, and the author's review friends let the following pass:

On pp 31-33 McKnight talks about how Ken Fisher says annuities have nose-bleed level fees. At the top of page 32 he talks about several categories of ANNUITIES and how they have no fees. (He specifically DOES NOT mention income riders.) He then goes on, on pp 32-33 to describe how a SPIA can provide lifetime income as an alternative to Ken Fisher's stock market approach.

no problem there.

But, on p127, in a distribution case study, he talks about using an FIA to mitigate longevity, but with an income rider, which as far as I know will have a fee. There is no discussion about a fee in that approach. Again not a problem, except he's putting that in the context of his approach is better because for one thing, it doesn't have fees.

Like I said, to me that is a disconnect which I don't know why someone did not catch.

 

[LostDollar]

Partnership LTC is all but gone, particularly in California where this state pioneered it. There used to be several companies that offered Partnership LTC in California. The latest one that agents could sell... was Genworth - which is now trying to get their ratings back up to an acceptable level, but I haven't been following them in some time. The other large one was CalPERS - available to state employees only and not sold by agents.

Today there are none.
https://www.dhcs.ca.gov/individuals/rureadyca/Pages/home.aspx

In fact, California is exploring more of a mandatory LTC program for those who don't have any kind of LTC, like what Washington state has done.
[EXTERNAL LINK] - Long-Term Care

LTC is going from "get to" purchase LTC decision to a "forced to" purchase LTC decision.

Let's clarify: most "long term care" riders on life insurance (particularly IUL that McKnight is most fond of) is not a true long term care policy (7702b). They are a chronic illness rider (101g) and doesn't have the same tax qualification status.

They both pay for LTC expenses, but they aren't the same thing.

As for McKnight's assertion that you can withdraw 100% of your policy's value in a 4-year time frame... that *may* be an exageration. I'm not sure. Sometimes when he talks about IUL, he references two of his favorite companies (I think Allianz is one of them).

Accelerated Death Benefit riders (101g) for chronic illness do NOT have their own defined schedule of payments. Rather thay are often paid out based on remaining life expectancy - especially for critical illness (heart attack, stroke, or qualifying cancer diagnosis).

A stand-alone LTC policy has a defined schedule of benefits and therefore has more predictability and certainty with those policies than only relying on a rider on a life policy.

Here's the stuff from the policy I purchased. It seemed pretty concrete to me but it may not be the kind of thing you were talking about.

MAXIMUM ACCELERATED DEATH BENEFIT
The sum of all Accelerated Death Benefit payments may not exceed the
lesser of $100,000 or 75% of the Face Amount, whichever is less, subject to
the further requirement that the remaining Death Benefit be no less than
$10,000.

NURSING HOME BENEFIT
If your client is confined to a nursing home and is expected to remain there for
the rest of their life they may be entitled to a monthly benefit determined by
the number of years the policy has been in effect prior to the benefit claim. If
the policy has been in force LESS THAN 5 YEARS...The monthly benefit is
equal to 1% of the death benefit (subject to a maximum of $4,000 per month).
If the policy has been in force 5 YEARS OR LONGER...The monthly benefit is
equal to 3% of the death benefit (subject to a maximum of $4,000 per month).

 

[DHK]

That's not a long-term care schedule of benefits.

With long term care (and I'm certainly not an expert), but when you are on an eligible claim, you will collect what the policy explicitly says - usually a maximum per day on either an indemnity (cash) basis or on a reimbursement basis.

An accelerated death benefit rider payout is typically based on underwriting at the time of claim, as your post shows.

True LTC will allow you to have care at home, not require nursing home confinement to access benefits.