Regular LTC policies without rate increases?

[JJ2713]

The question is "how much more?"
When consumers realize that they can get a traditional LTCi policy for about one-third the cost of a hybrid (sometimes even less) they pick the traditional and they keep the rest invested and earning money for themselve (not the insurance company).

Of course, the difference matters.

But it's also about the unpredictability of the rate increases. People don't like not knowing what their premium is going to be, especially for something so important and something they've paid into for many years.

You have to remember, many people make decisions with emotion and not logic.
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Have you ever had a client who simply refuses to get a regular LTC policy? These people exist.

Why not just present all options and let them decide. Give the pros/cons of each strategy.

Or even use a multi-strategy approach.
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You're correct in what you're saying. Regular LTC is cheaper and has more LTC leverage, but some people just don't want it.

Like I said about the annuities...

The SPIA/DIA pays more income, but some people won't annuitize. So a FIA+income rider is the other option. Not as good, but it still gives them guaranteed income.

Present all annuity options. List the pros/cons. Let the person decide. Or put some money into each.

This LTC debate is exactly like the annuity debate.

 

[ltcadviser]

How do you present LTC to clients?
Present all options and let them decide?

That is what I do, yes.

I am neutral.

 

[scagnt83]

Some hybrids do NOT have guaranteed level premiums.

The big players account for about 25% of the hybrid sales.
Most hybrids are CI riders added to IUL policies sold to people in their 30's and 40's.

Then there are zero unexpected rate increases on those. The highest rate possibly charged in an IUL is set in stone in the contract. It is illegal for the carrier to increase rates above the maximum charges stipulated in the contract.

Very big difference. And not anywhere close to how you are trying to describe it. Not even close to comparable to the rate increases of traditional LTCI.

 

[Mr_Ed]

Then there are zero unexpected rate increases on those. The highest rate possibly charged in an IUL is set in stone in the contract. It is illegal for the carrier to increase rates above the maximum charges stipulated in the contract.

Very big difference. And not anywhere close to how you are trying to describe it. Not even close to comparable to the rate increases of traditional LTCI.

When dealing with a salesperson always look for what is NOT said.
What is not said in this reply is that most people who buy the IUL's with CI riders are not paying the premium that is required to keep the policy in-force through age 100. Therefore, the policies will either lapse OR they will have to pay SUBSTANTIALLY higher premiums when they get older in order to keep the policy in-force.

Anyone who uses indexed universal life insurance to plan for long-term care is either a fool or an insurance agent.

 

[scagnt83]

When dealing with a salesperson always look for what is NOT said.
What is not said in this reply is that most people who buy the IUL's with CI riders are not paying the premium that is required to keep the policy in-force through age 100. Therefore, the policies will either lapse OR they will have to pay SUBSTANTIALLY higher premiums when they get older in order to keep the policy in-force.

Anyone who uses indexed universal life insurance to plan for long-term care is either a fool or an insurance agent.

Most? That is factually incorrect. Most IULs and ULs do not lapse. Statistics are not on your side.

If an IUL or UL is being underfunded, that is because of an incompetent agent. And even then, the likelihood of needing a 100% increase is extremely slim. The agent would have had to sold it at Minimum Premium for something like that to happen... which is just pure negligence.

And I never said that a LTC Rider is a substitute for traditional LTCI.

Any Agent who is incapable of understanding the value and benefit of a LTC Rider (true LTC Rider based on ADLs), most likely has not tried to, or has not looked at decent products. Is it for everyone? No. The older someone is, the less it will be a good fit. But the industry is moving towards insuring younger people via Riders, because traditional LTCI is not a sustainable business practice. Numbers dont lie. Common sense doesnt lie. And Consumer sentiment does not lie. The writing is on the wall for those who are willing to read it. And the opportunity with new innovative products is there to grab if you have the brains and drive to do so.

 

[ltcadviser]

And the opportunity with new innovative products is there to grab if you have the brains and drive to do so.

Amen brother

 

[Mr_Ed]

because traditional LTCI is not a sustainable business practice.

That's what they said about annuities 100 years ago.

 

[scagnt83]

That's what they said about annuities 100 years ago.

And annuities of today look nothing like annuities from 100 years ago. That thinking was not based on facts, it was based on hyperbole. Mostly it was bias left over from the era of Tontines. The modern free market had not yet experienced seriously regulated insurance/retirement products. We have tons of statistical data about LTCI under current regulations.

Remind me again what the maximum Premium is on an LTCI policy?

I can tell every single IUL or UL client what the maximum possible premium is allowed by law. It is right there in the contract and on the illustration.

 

[Mr_Ed]

And annuities of today look nothing like annuities from 100 years ago. That thinking was not based on facts, it was based on hyperbole. Mostly it was bias left over from the era of Tontines. The modern free market had not yet experienced seriously regulated insurance/retirement products. We have tons of statistical data about LTCI under current regulations.

Remind me again what the maximum Premium is on an LTCI policy?

I can tell every single IUL or UL client what the maximum possible premium is allowed by law. It is right there in the contract and on the illustration.

The maximum possible premium on the IUL is about 2x to 4x what comparable LTCi benefits cost.

There is a cap on LTCi rate increases for policies issued under the Rate Stability Regulation. You should know that.

Can you explain, for the benefit of the readers of this forum, how the Rate Stability Regulation works?

I won't hold my breath.

 

[ltcadviser]

There is a cap on LTCi rate increases for policies issued under the Rate Stability Regulation. You should know that.

Can you explain, for the benefit of the readers of this forum, how the Rate Stability Regulation works?

I won't hold my breath.

When did Florida pass the rate stability regulation?

Why did my clients just get a 98% rate increase on a policy sold to them in 2013?