One America Inflation

[bluemarlin08]

How do you explain the fact that a policyholder won't have inflation protection on all benefits? Do you explain that if they go on claim in say 20 years they will have to pay perhaps the same amount deposited initially to cover their costs the first 2 years?

 

[ltcadviser]

Hi Ned, Simply explain the policy to your clients.

If your client needs to have a monthly benefit higher than what the policy will provide to your client in the first 25 months before the inflation adjusted Lifetime LTC Rider becomes effective than do not write the Asset Care policy for your client.

The Asset Care policy is a 2+ Life design.
Generally speaking the policies with limited benefit period multipliers such as 6 years for example are in essence 2+ 4 designs that morph into 1+ 5 designs once the inflation protection has been built in to the monthly benehits.

So, either way with asset based policies the policy owner is totally using its own money for either 1 or 2 years generally.

The insurance company money is on the tail end of the contributed asset.

Your clients just need to detetmine if they would prefer 2 + Life designs over 1 + 5; or vice versa.

 

[bluemarlin08]

Thank you Jack, that makes it clearer.

 

[Mr_Ed]

Nothing like a policy with a $100,000 deductible. What a deal!

 

[ltcadviser]

Nothing like a policy with a $100,000 deductible. What a deal!

Only IF a claim is made. My mom has paid almost $100000 into her traditional stand alone policy which has zero cash value, and John Hancock keeps sticking her up for rate increases every year. She has lost six figures for NOT MAKING A CLAIM. What a deal!

You want to free lunch, Scott? Go eat at the Medicaid table!

 

[Mr_Ed]

... rate increases every year?

I call b.s. on that one.

 

[bluemarlin08]

My concern is if a guy at say age 60 buys a 8000 lifetime benefit with 3% inflation for say a 200,000 one time payment. He goes on claim in 20 years, cost of NH care is now ,16,000 per month, he has to come out of pocket another 200,000, assuming the claim lasts more than 2 years. Now net cost, not including lost opportunity is 400,000.

 

[Mr_Ed]

The only people who should do single pay hybrids are people who can't health qualify for anything better.

 

[ltcadviser]

My concern is if a guy at say age 60 buys a 8000 lifetime benefit with 3% inflation for say a 200,000 one time payment. He goes on claim in 20 years, cost of NH care is now ,16,000 per month, he has to come out of pocket another 200,000, assuming the claim lasts more than 2 years. Now net cost, not including lost opportunity is 400,000.

Thoroughly review and discuss your client’s assets with them before making any recommendations for any policy design.

 

[ltcadviser]

The only people who should do single pay hybrids are people who can't health qualify for anything better.

Oh stop it already. We get it. You are right, and the rest of the industry and every other financial planner and adviser is wrong.