Ohio National, a big variable annuity provider, exits the annuity business

[Mr_Ed]

Obviously that depends on the product. Lots of variations out there at this point. All of them have different pros/cons/benefits/etc.

For most policies the interest is zero or negative.

 

[Mr_Ed]

It all depends on your definition of cost.

Hey, whenever you get around to it, please share your "definition" of cost.

 

[Allen Trent]

It's a trend that favors insurance companies, not consumers.

I am not a fan of hybrids over stand alone LTC. however, how can 200,000 more people per year having a plan for paying for some of their Chronic illness or Nursing Home/LTC care costs not favor those consumers? I don't believe all 200,000 per year were buying stand alone LTC & are now going toward hybrid. Stand alone LTC provides real actual new dollars to pay for care. Most Accelerated DB CI riders to Life or Annuity don't provide new buckets of money to pay for care other than the added face amount from the leverage of premiums. if a client entering a home approached me as to where to pay for their care. If they don't own stand alone LTC, I would still most often suggest to spend money from Qualifed funds/ Annuities/Bank Cash 1st & Roth/Life/Hybrid/After tax stocks-funds last. why utilize acceleration of your death benefit on a hybrid to shrink a tax free death benefit to heirs when taking the same funds from IRA/401k spends the same amount of money, but would have only been 60 or 70 cents on the dollars to heirs.

stand alone LTC still makes the most sense, but most consumers & agents have less interest or got burned on the premium increases or the mass exodus of carriers offering it

 

[Mr_Ed]

no problem. Better graphic attached showing hybrids are 2/3 of total policies sold per year & 93% of all premium paid per year. This came from the following NAIC report: https://www.naic.org/documents/cmte_e_mlwg_related_state_of_ltc_industry.pdfView attachment 4717

Hybrid LIMRA survey for 2016:
- 47% Chronic Illness Rider (101g)
- 39% Acceleration of Death Benefits only
- 14% Extension of LTCi Benefits.

That means that 86% of hybrids are useless for planning for long-term care.

 

[Mr_Ed]

stand alone LTC still makes the most sense, but most consumers & agents have less interest or got burned on the premium increases or the mass exodus of carriers offering it

Concerns about rate increases would be justified if the policies available for sale today were priced the same way old policies were.

 

[Allen Trent]

For most policies the interest is zero or negative.

I think you are only talking about the hybrid life with true LTC bucket of money. a Life with Accelerated death benefit for Chronic illness performs with whatever interest the contract credits of 3%, 4% or even 11%. the cost to add the Accelerated Death benefit for Chronic illness is a very small fraction of the COI because it is merely letting you accelerate on monthly basis for Chronic care rather than accelerate 1 time like is the case with Terminal Illness that has no cost.

 

[Mr_Ed]

I think you are only talking about the hybrid life with true LTC bucket of money. a Life with Accelerated death benefit for Chronic illness performs with whatever interest the contract credits of 3%, 4% or even 11%. the cost to add the Accelerated Death benefit for Chronic illness is a very small fraction of the COI because it is merely letting you accelerate on monthly basis for Chronic care rather than accelerate 1 time like is the case with Terminal Illness that has no cost.

Do you really think consumers are earning 3%, 4% or even 11% on their cash values in these policies?

Really?

You know it's just a mirage, right?

 

[Allen Trent]

Concerns about rate increases would be justified if the policies available for sale today were priced the same way old policies were.

totally agree. But you & I cant make all existing agents & consumers forget that. Keep in mind, most agents in the industry sell some other products as their main product lines.

So, Life/Financial agents quit dealing with stand alone LTC because of how long the appointments with clients take, having to deal with the most interested clients being those that are too unhealthy to qualify, the sticker shock & then the decline rate. So, they gravitate to easier sales.

The agents that generally have the most indepth client relationship is the PC agent, but they avoid LTC because of the complexity, they focus on auto/Home/ commercial & life. LTC has all the same problems I stated above of too time consuming, eligibility, sticker shock & decline rates.

Whether you I like the facts that hybrids are skyrocketing doesn't matter, but it appears to me the demand & simplicity to help some clients "plan" for how to pay for some of the care is what is causing the change. It is still a plan, whether it is ideal in our perfect world or not

 

[Allen Trent]

Do you really think consumers are earning 3%, 4% or even 11% on their cash values in these policies?

Really?

You know it's just a mirage, right?

I believe the earth is round. Do you know something I don't? I have seen client statements where their CV accounts were credited with 3%, 4% or 11%. So, yeah, I do believe that is the case. Obviously, COI for the life insurance components is deducted from that.

 

[Mr_Ed]

totally agree. But you & I cant make all existing agents & consumers forget that. Keep in mind, most agents in the industry sell some other products as their main product lines.

So, Life/Financial agents quit dealing with stand alone LTC because of how long the appointments with clients take, having to deal with the most interested clients being those that are too unhealthy to qualify, the sticker shock & then the decline rate. So, they gravitate to easier sales.

The agents that generally have the most indepth client relationship is the PC agent, but they avoid LTC because of the complexity, they focus on auto/Home/ commercial & life. LTC has all the same problems I stated above of too time consuming, eligibility, sticker shock & decline rates.

Whether you I like the facts that hybrids are skyrocketing doesn't matter, but it appears to me the demand & simplicity to help some clients "plan" for how to pay for some of the care is what is causing the change. It is still a plan, whether it is ideal in our perfect world or not

A life policy with a CI rider is no plan for long-term care.