LTC Annuity

[Arthur Rudnick]

originally posted by scagnt83

But imo, the LTCFA
is better if you need to take income (considering the annuitization options available).

So if the funds have a higher likelihood of being needed to supplement income, the FA might be the better option, especially considering the tax advantages of annuitizing NQ funds. It also has a guaranteed increasing income as opposed to a decreasing one.

Doesn't that confirm what I stated? If the liklihood is to maximize income, where does LTC coverage fit in to that conversation?

IMO, a Life/LTC hybrid policy makes more sense, although that also addresses 2 different concerns. Ideally, a separate life and separate LTC policy, all things being equal, would appear to be the way to go.

 

[scagnt83]

There are a number of issues that bother me. First of all, in today's interest rate enviorment, who would want to purchase an annuity that's paying 1%? Might as well put $100,000 under the matress and have 100% access at anytime.

Because it can immediately create 3x that amount in LTC benefits. There are plenty of people who have large amounts of money currently making much less each year...

Its not a great rate when compared to the top 7y FA which is currently paying 3%. But that doesnt come with 3 times the deposit for LTC benefits either. A 2% spread isnt bad for 300% LTCI leverage imo.

And the funds that are usually used for these types of products are not funds that are currently needed. Its the "just in case" CD, or funds that will "probably go to the kids... if I dont need it". Or its the person that has enough that they feel "self insured"; thats when you ask "what if you could leverage your self insured money by 300%?... just in case."

 

[ltcadviser]

originally posted by scagnt83



Doesn't that confirm what I stated? If the liklihood is to maximize income, where does LTC coverage fit in to that conversation?

IMO, a Life/LTC hybrid policy makes more sense, although that also addresses 2 different concerns. Ideally, a separate life and separate LTC policy, all things being equal, would appear to be the way to go.

I am working with a 68 year old single applicant and an LTC annuity combo is crushing both standalone and life/LTC combos. Each case is unique. If you blend in 5% compound inflation the linked benefit annuities offer good leverage. The linked benefit annuity isn't used for income. It is used for long term care leverage

 

[Arthur Rudnick]

originally posted by ltcadvisor

I am working with a 68 year old single applicant and an LTC annuity combo is crushing both standalone and life/LTC combos. Each case is unique

.

Just curious Jack..........

Where do most of your Annuity/LTC sales originate from:
Are these prospects interested in LTCi first, or is their focus on an annuity?

 

[scagnt83]

Another issue, if someone throws a couple of hundred grand into this product and needs LTC services down the road, the first $200,000 that the company is paying in benefits are the policyholder's own money, not one dime of the company's money. Not sure that makes much sense.

At heart its a form of self insuring. You pay half, they pay half; or you pay a third, and they pay 2/3.

It decreases CV, but isnt the point of these funds to help pay for LTCI if its needed?

To each their own, it appeals to certain clients.

 

[ltcadviser]

originally posted by ltcadvisor

.

Just curious Jack..........

Where do most of your Annuity/LTC sales originate from:
Are these prospects interested in LTCi first, or is their focus on an annuity?

Focus is only on LTC. Opened up 2 cases yesterday from call ins to my office.

 

[scagnt83]

One more issue: It appears that on this Lincoln product, they only pay 50% of the LTC benefit for home care. They pay 100% as a nursing home benefit. Who in their right mind would purchase a LTC policy and only see a benefit advantage by entering a nursing home?

Im not endorsing the feature, simply explaining their logic.

They dont reduce your total amount of benefits. But for homecare they reduce the monthly and extend the amount of years paid.

Their reasoning is that on average homecare cost less and often lasts a longer amount of time.

Some of you guys probably know the stats better than I do. But its Lincolns reasoning, not mine.
- - - - - - - - - - - - - - - - - -

Doesn't that confirm what I stated? If the liklihood is to maximize income, where does LTC coverage fit in to that conversation?

IMO, a Life/LTC hybrid policy makes more sense, although that also addresses 2 different concerns. Ideally, a separate life and separate LTC policy, all things being equal, would appear to be the way to go.

Your missing the point. I didnt say maximize income. I said "if its needed to help supplement".

If its probable that they wont need it for income, then MG is often a better choice. If they might, the FA is a better option imo.


The Income Doubler products are a different animal for funds with a different purpose. You have to already be taking income for it to be of any benefit. If the funds are not yet needed for income then its useless.



But I do agree with you Arthur. Standalone policies are almost always more comprehensive. But a LTCFA is better than no LTC coverage at all!

 

[Arthur Rudnick]

originally posted by ltcadvisor

It decreases CV, but isn't the point of these funds to help pay for LTCI?

If the point is to help pay for LTC, you can't convince me that Lincoln's Annuity/LTC Rider offers anywhere near as good a LTCi product than a stand-alone policy from either Genworth or MedAmerica, to name just 2.

If the concern is LTC, sell them a LTC policy. If their concern is getting a fixed income down the road, sell them an annuity.

Is there a market for a hybrid policy? I guess there is, but I'd rather sell a stand-alone LTCi policy, knowing the policyholder has the best LTCi policy on the market.

Lincoln's contract only pays 50% for home care. When the world's focus is on home care, why would you sell a policy with minimal home care benefits? I'm sure when you write a LTC policy for your clients, everyone has home care at 100%.

 

[howardseigle]

Not only that, but BOTH spouses would need to purchase the hybrid.

 

[Arthur Rudnick]

"Not only that, but BOTH spouses would need to purchase the hybrid"


And, why is that?