LTC Annuity

[thewold]

Sorry Patch36, my explanation was for smartmoney about the difference b/w a regular annuity and LTC annuity. I didn't see your post when I started mine. I haven't quite figured the quote tool.

I feel the same way you do about having both policies. On paper it just makes sense IMO. I do like the idea of the MOO LTC annuity though for those over the age of 75 where premiums tend to get real pricey. Otherwise, the smart move is to have the standalone LTC. And you are right on about taking the systematic withdrawals to fund it. Great strategy.

What I tend to run into is people not wanting to pay the premiums for something they might not use. That and plain ignorance seems to be the major objections I run across when talking to people about LTC who can affort it. It seems that unless someone has gone through LTC with a family member or friend, they don't see the importance. These people tend to like the idea of a LTC annuity or LTC life. Even if they don't use it, someone will benefit from it. As long as they have some kind of plan in place, then they are in a better position I think. Ideally it would be LTCi, but if their goal is to self insure, well then Mr. Smith, let me show you how you can do that.

 

[Mr supplemental]

There's such a big push in the insurance world right now to aggressively marklet the LTC products, but agents aren't flocking to them because they are problematic and time consuming and may get killed in underwriting. Agents prefer the quick money by and large. And like you said, customers aren't really sure it's the best use for their money. The PTL quickpass is making it somewhat easier to write.

 

[thewold]

They definitely can be problematic. I haven't had near the problem with LTC underwriting as I have Life, DI, or even health. IMO, it easier to qualify someone for LTC than a lot of other policies. On the other hand, a lot of the people I talk to who are interested in LTC are only interested in it because their health has declined and now they think they may need it. Too late now. That's the ignorance part I was talking about. Like the people who feel a lump somewhere and decide that it would be a good time to finally get some health insurance.

The biggest problem I see with LTC is the claim process. I haven't had a lot of experience with it but the couple I have had have been a lot of work. Claim forms from doctors, providers, care notes, bills. The doctors don't know how to properly fill out a claim form and are in no hurry to do so, providers can't get you the required documents in a timely manner. And if the policy is a reimbursement policy, the client waits forever to get reimbured.

I also think the LTCi industry is in trouble with a lot of policies out their that are underpriced. I also see insurance companies continually having price increases after so many years. We are seeing it now with a lot of major players and I don't think it will be the last time the Genworths and JH raise their rates.

This does make the combo products look a little better plus they pay out as indemnity which makes it a little easier. I'm on the fence with LTC. One day I want to focus on it because I think it is so important, the next day after dealing with a claim, I don't want to touch it because of all the problems.

 

[Mr supplemental]

I think you made a great point. I was reading a trade journal the other day, and the point was made that claims are often not paid as promised and also that rates often increase significantly. Of course the article, written from a LTC carrier perspective, argued that most clients are very satisfied and that such problems are minimal, but that's like asking a barber if you need a haircut. I suspect the truth is closer to the complainant than the attorney for the defense.

 

[SmartMoney]

Interesting information to know, Im still thinking its in the clients best interest in most cases to have 2 stand alone plans. You can certainly find them a plan with a better annuity rate & LTC plan with better features from the sounds of it.

 

[Brokers Alliance]

I also believe it is a marketing thing and I would rather use stand-alones with specific riders.

This reminds me of Mortgage Protection insurance. Why does anyone need to pay those high prices for a specific expense when you can get Term to cover your mortgage and any and all other expenses - at half the cost?

* Nothing against anyone doing mortgage protection. There are some good guys selling it who care about their customers

 

[Pooky78]

One of the benefits I have noticed for LTC Annuities is that it is easier for some to pass underwriting. This is because the client is using their own money first, so sometimes LTC Annuities are the only option that they have vs. stand alone LTCi.

 

[Charpress]

An interesting product to present to folks who don't want to spend money for LTC insurance is the GILICO fixed product that triples the annuity value upon LTC need.

So, if someone put $100k into premium and 2 years later had to go into a nursing home, the value would be $300k (plus 3 times whatever growth) and then it would annuitize for monthly income while the need exists. If LTC is never needed, then it operates as the usual fixed annuity with walkaway and beneficiary provisions.

I've tried to sell it a few times, but always was turned down since underwriting is somewhat strict.

 

[hamben]

I think the importance of the LTC Annuity product is it lets agents offer two different options when dealing with clients. You can show a standalone LTC product as option A and then show a LTC annuity as Option B. I have found that it helps change the abjection of if I need LTC to which one is the best way to go.
It's been my experience that intelligent people will make intelligent choices as long as they have all of the facts.
The MOO LTC Annuity is designed to offer LTC Benefits on a tax free basses that is 3 times the value of the annuity at the time of first claim. This is for people to reallocate some of their existing non qualified safe money into a qualified safe money.
In lemans terms continuing to build on existing assets with guaranteed tax free plans.

Just my opinion i'm sure others will disagree.
Lee
www.leebenhamassociates.com

 

[Ichiban]

There is also another option too. It is not a true LTC annuity Combo product but works almost the same. It's from Investors Insurance (Legacy). The cool thing about it is that there is no underwriting at all not even knock out questions. The down side is the client can't access it until 6 years after it is issued but that's not such a big deal in my opinion because if they are sick enough to likely need it in 6 years they won't be able to get it from anywhere. Also it's not a spend down benefit where you have to exhaust the clients money first before any benefit is paid out. I am pretty excited about it.

http://www.legacynet.com/portals/1/ECR/ECR_Sell_Sheet.pdf