It’s The NEED, not the Product!

There is much debate in the financial planning community of late regarding WHICH product is the “best” solution for LTC (Extended Care) planning.

On May 22-24, 2018, we held our first-ever “LTC Solutions Carrier Days” in Plainview (Long Island), Clifton Park, and Verona (at Turning Stone Resort Casino), NY, where we examined the current landscape of ALL the insurance based LTC financing solutions, as delivered by a number of our key carrier partners.  The positive feedback we’ve received from those sessions has been overwhelming!

Our carrier partners – Genworth Financial and Mutual of Omaha (Standalone LTCI), American National, Nationwide Financial, Prudential and AIG/U.S. Life of NY (Life Insurance with Acceleration Riders) and Lincoln Financial Group (Money Guard Linked Benefit) – did a terrific job sharing their respective insights with our attendees as to how their respective products help mitigate the risk and resultant IMPACT of a Long-Term or Extended Care event for their clients.

Our main takeaway from the sessions was that NO ONE PRODUCT is the “end all, be all” solution for ALL client situations!  Similarly, we came to the ultimate conclusion that the insurance is NOT the problem;  it is the potential SOLUTION to the problem of a potential LTC or Extended care event for many of your clients!

In fact, we were reminded – and in fact many attendees indicated they DISCOVERED – that each of the products presented has its own strengths given specific client desires and plans!

Here is just a sampling of some other things we took away from the meetings:

  • Standalone LTCI remains the most cost effective, pure LTC insurance tool on the market
  • Client perception naturally plays a big role in their decision making
    • And sometimes we need to EDUCATE them about the realities
  • Consumers have concerns about rate stability on standalone LTCI
    • Have you seen the November 2016 SOA LTCI Pricing Study? If not, email me for a link – you may be surprised at their findings!
  • Some consumers – but not all – want to maximize their LTC benefit per premium dollar in exchange for a benefit at death if LTC is not needed (much like other types of insurance)
  • Some consumers – but not all – are willing to have a bit less in LTC benefit per premium dollar in exchange for a return of premium guarantee – either while living or at death (if LTC not needed)

Our LTC Carrier partners helped us demonstrate those choices, and how their respective products could provide the best LTC protection for them.  The attendees were also exposed to some brand new information on the latest product designs.

For instance, did you know?:

  • There are some standalone LTCI policies that offer some level of premium guarantee?
  • There are some standalone LTCI policies that offer return of premium if LTC is not needed?
  • There are some Life Insurance policies that offer premium guarantees (GUL), AND a rider that can provide a benefit for LTC or extended care (sometimes referred to as “chronic illness”)?
  • There are some GUL policies that have a TRUE LTC rider (under section 7702[B] of the tax code), which pays a cash indemnity (vs. cost reimbursement) LTC benefit?
  • You client can use a lump sum of “lazy money” (that is probably earning a very low interest rate right now, and they may be presuming that account will pay for LTC if needed) and get an LTC benefit of 4-5 times (or more!) of that amount, as well as a full return of premium benefit (from Day 1) AND a death benefit greater in excess of the premium paid, income tax free?
  • There are some GUL policies that offer a number of riders, including the ability to accelerate benefits for:
    • LTC or chronic illness
    • Critical illness
    • Terminal illness
    • Guaranteed “cash out” (future return of all or a portion of premiums paid, guaranteed!)
    • Income riders on GUL that allow a policyholder to get ALL of their premiums back later AND still retain a portion of their death benefit (which can also be accelerated for chronic illness!) all GUARANTEED?
    • Chronic illness, without the need to have a condition that is permanent, in order to trigger the chronic illness benefit!

Ultimately, the KEY takeaway, and the main premise of this article, is that, while we can debate which product is “best” in planning for LTC or extended care needs, the one thing we can (and, in fact, MUST) agree on is that the one thing that is not changing, is the NEED for proper LTC or Extended Care planning.

Our aging population growth (which is where a majority, but not all, of LTC costs will be generated) will continue to grow faster than the next population wave, resulting in (among other things) a shortage of caregivers – family or paid – and a vital need to plan in advance.  Those who have planned in advance will be in a better position to finance the costs of care, and be at the “front of the line” if/when supply and demand of care givers results in preference to those who have adequate liquid assets or income to pay for care.

Let us help you help your clients plan, and plan in a way that is “best” for them!.

Call us today at (800) 695-8224 or email us to find out more about some of these latest product developments!

By: Bob Vandy, CLU, ChFC, LUTCF, CLTC – President, AIB