Private LTCi Combined W/Life Insurance

[ltcadviser]

If you see a need for life insurance, purchase a separate life policy. A hybrid policy will cost you substantially more than a separate LTC & Life policy.

I wasn't looking for a LTC policy, but it seems that the life insurance policies automatically come with it. There are even term policies that have "living benfits" with them. I will ask if they are separate riders, but amost every policy I have seen offers this extra benefits to accelerate the insurance to you while you're alive.

I don't want to pay extra if I don't have to so I will ask.

There are no fees to include these accelerated riders into your policy, but there are definitely fees on the backend if you exercise the riders.

There is a small admin fee to accelerate the death benefit if you are declared terminally ill and have less than 6 months to live;

In contrast, there can be huge fees if you purchase a policy with an LTC rider that accelerates the benefits if you need LTC. Fee based upon age of acceleration. For example, fee can be 20% of the death benefit for a 70 year old male to exercise LTC rider. Most agents don't really understand or discose the internal fees to accelerate death benefit early for LTC. The fees for LTC acceleration are substantially higher because the insurance company does not know when and if you will die. Thus it is providing your DB to you substantially earlier and must charge you for lost investment income. If your estate has liquidity, probably better off not utilizing an LTC rider within a life policy because your face amount ends up really getting whacked. Think if an LTC ABR as discounting your death benefit if you require LTC.

 

[csalter]

There are no fees to include these accelerated riders into your policy, but there are definitely fees on the backend if you exercise the riders.

There is a small admin fee to accelerate the death benefit if you are declared terminally ill and have less than 6 months to live;

In contrast, there can be huge fees if you purchase a policy with an LTC rider that accelerates the benefits if you need LTC. Fee based upon age of acceleration. For example, fee can be 20% of the death benefit for a 70 year old male to exercise LTC rider. Most agents don't really understand or discose the internal fees to accelerate death benefit early for LTC. The fees for LTC acceleration are substantially higher because the insurance company does not know when and if you will die. Thus it is providing your DB to you substantially earlier and must charge you for lost investment income. If your estate has liquidity, probably better off not utilizing an LTC rider within a life policy because your face amount ends up really getting whacked. Think if an LTC ABR as discounting your death benefit if you require LTC.

There's always a catch, isn't there. My parents always told me that you don't get something for nothing.

 

[Norwayguy]

There are no fees to include these accelerated riders into your policy, but there are definitely fees on the backend if you exercise the riders.

There is a small admin fee to accelerate the death benefit if you are declared terminally ill and have less than 6 months to live;

In contrast, there can be huge fees if you purchase a policy with an LTC rider that accelerates the benefits if you need LTC. Fee based upon age of acceleration. For example, fee can be 20% of the death benefit for a 70 year old male to exercise LTC rider. Most agents don't really understand or discose the internal fees to accelerate death benefit early for LTC. The fees for LTC acceleration are substantially higher because the insurance company does not know when and if you will die. Thus it is providing your DB to you substantially earlier and must charge you for lost investment income. If your estate has liquidity, probably better off not utilizing an LTC rider within a life policy because your face amount ends up really getting whacked. Think if an LTC ABR as discounting your death benefit if you require LTC.

I don't lay a lot of blame on the agents here....Take ANICO the riders are very vague in the client materials and not more extensive in the for agent use only materials. I explain that these riders underwrite for your condition of the use of the rider at the time of need and the company will make an offer that you can accept or not, the riders add options but do NOT take the place of a DI, LTC. Or CI policy.

 

[ltcadviser]

I don't lay a lot of blame on the agents here....Take ANICO the riders are very vague in the client materials and not more extensive in the for agent use only materials. I explain that these riders underwrite for your condition of the use of the rider at the time of need and the company will make an offer that you can accept or not, the riders add options but do NOT take the place of a DI, LTC. Or CI policy.

You provide good advice. I commend you. Unfortunately It is my experience that many agents are salespeople and allow themselves to be marketed to by FMOs. Many agents are ignorant about the contracts. Ultimately it is the agent's responsibility to know most everything about the contract they represent. Surely the agent needs to understand fees and guarantees. Otherwise, the agent has no right to any compensation. If the materials are vague, ...and I agree with you the fees associated with the LTC ABR are purposefully vague...the agent needs to start asking questions. Unfortunately I am not impressed with a lot of agents to perform in this capacity.

 

[csalter]

You provide good advice. I commend you. Unfortunately It is my experience that many agents are salespeople and allow themselves to be marketed to by FMOs. Many agents are ignorant about the contracts. Ultimately it is the agent's responsibility to know most everything about the contract they represent. Surely the agent needs to understand fees and guarantees. Otherwise, the agent has no right to any compensation. If the materials are vague, ...and I agree with you the fees associated with the LTC ABR are purposefully vague...the agent needs to start asking questions. Unfortunately I am not impressed with a lot of agents to perform in this capacity.

I will say that I have not had an agent tell me of limitations on the "living benefits". The brochures tout these benefits as big deals. However, the agents do not discuss the fees associated with those benefits. The client does not know to ask those questions. I have only had one agent who came and sat down with me after the policy came. Also, with life insurance if you go online for term4sale.com, you can get an agent from another state. You're certainly not going to get the TLC that you need to walk you through the contract.

 

[ltcadviser]

I will say that I have not had an agent tell me of limitations on the "living benefits". The brochures tout these benefits as big deals. However, the agents do not discuss the fees associated with those benefits. The client does not know to ask those questions. I have only had one agent who came and sat down with me after the policy came. Also, with life insurance if you go online for term4sale.com, you can get an agent from another state. You're certainly not going to get the TLC that you need to walk you through the contract.

I give TLC to my out of state clients. I agree however that consumers don't know to ask the right questions; it is the job of the agent to raise all issues and provide disclosure for the client.