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LTC vs UL Insurance with Rider
Old 08-14-2013, 10:58 AM   #1
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LTC vs UL Insurance with Rider

We were presented with some options for an LTC approach. Traditional LTC, One that is like an annuity and one that is a Universal Life policy with a "life Access" rider. The last one form Hartford seems interesting (I think).

To summarize:
1. It is a 750k life insurance policy
2. At anytime if you meet 2 of 5 conditions determined by a HC provider you can start drawing up to 15k per month and use it for anything. (in home, travel for assistance...your call)
3. Once you start drawing the monthly premiums stop.
4. What ever you draw reduces the payout for the death benefit.

I think the premiums are expensive (like 13k for me) so take that times two. You can reduce the 150k death benefit which would reduce the monthly payout and the premiums.

This seems a little interesting and goes more in the direction of a catastrophic type deal (kind of). We don't really need the life insurance part but guess that would allow us to draw more principle knowing that was out there for the surviving spouse, to some degree.

The LTC policy was half the cost but monthly coverage graduates over time (starts at 5k/month and goes to 18k in 40 years), only lasts for 4 years and premiums will rise

Anybody look at one of these, thoughts
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Old 08-14-2013, 12:31 PM   #2
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It seems like you'd have conflicting goals. If a person is buying a "whole life" policy (whether UL or some other flavor), it should be because they have an after-death need for money. And they should know that they will, on average, get less payback from this policy than the sum of their premiums + interest (otherwise, the insurance company goes out of business). If this benefit is used to pay for LTC instead, then that goal remains unmet, and you'd have been better off to buy a cheaper LTCI policy.

Bottom line: With the guaranteed payoff upon death, the insurance company will need to charge a lot more than for "pure" LTCi, given the 1:3 (or whatever it is) odds of needing to pay off for a LTCi policy. Since you say you don't need the life insurance, I don't think this will pencil out to be a good deal for you.

I'd keep looking. Do you both need independent LTCi, or is it really only needed for the "first to go in the home."? At least a few years ago, some companies sold such shared-benefit policies, and (IMO) they can make sense if you are willing to accept the risk that, against the odds, you both together exceed the limits of the coverage.
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Old 08-14-2013, 12:50 PM   #3
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Interesting thoughts.

It is true, life insurance was not in our plan. I think we could self fund LTC unless it was for an extended period of time for both of us. I am just looking for some way to mitigate that risk form the catastrophic side of things.

Thanks for your thoughts.

I like that you are getting something back no matter what happens but the premiums are pretty steep.
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Old 08-15-2013, 07:14 AM   #4
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Some more info on the LTC insurance options that were presented. There were three and they were similar.

1. the payouts for 2 were 5k/month, and the other was $170.day.
2. they were both for 4 years and ttl payout was around 240k.
3. Premiums on 2 could go up 3%/yr ant the other tied to CPI.
4. Premiums averaged about $5,500/yr total for us.

There are some details I need more info on still. Like home health care options and such.

The underwriters are Genworth, Hancock and Transamerica.

Maybe I should have post this in the health section....mods please feel free to move if need be.
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Old 08-15-2013, 08:21 AM   #5
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Originally Posted by Jack_Pine View Post
Some more info on the LTC insurance options that were presented. There were three and they were similar.

1. the payouts for 2 were 5k/month, and the other was $170.day.
2. they were both for 4 years and ttl payout was around 240k.
3. Premiums on 2 could go up 3%/yr ant the other tied to CPI.
4. Premiums averaged about $5,500/yr total for us.

There are some details I need more info on still. Like home health care options and such.

The underwriters are Genworth, Hancock and Transamerica.

Maybe I should have post this in the health section....mods please feel free to move if need be.
Whenever insurance companies create a new, complicated product it is safe to assume that it is more of a benefit to them then to their policy holders. I'd stay away from this. If you want life insurance, buy a level term policy for the length of time you need the death benefit. If you need LTC insurance, buy LTC insurance.

There have been a number of recent threads about LTC insurance and self-funding. I suggest you search for these threads and see what's said.

Home health care (IMHO) is more of a pipe-dream than reality. If you have a reasonably healthy spouse, you won't need one if the only help you need can be handled by a HH aide coming in a couple of time per week. If there is more need than the spouse can do, trying to have daily visits will quickly become very expensive when compared to assisted living. If there isn't a spouse, it's probably better to be in an assisted living facility and get rid of the house for the socialization if nothing else. Again, IMHO. I watched my in-laws try to fight this losing battle.
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Old 08-15-2013, 06:21 PM   #6
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Anybody look at one of these, thoughts
Any time that a LICO invents a new product there is but two reasons to do so~income for those selling and those issuing the policy. There are a lot of folks that get in line at getting a hit off of that teat before they even think of the policy owner.

I would pass on that policy and run away...run away.
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Old 08-16-2013, 07:26 AM   #7
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I did go back and read most of what was current on LTC issues.

I presumed most would say run away from the insurance product. I could be convinced to look at it if the premiums were not so high. But I know how insurance works and the design is for them to make money.

I am still torn about weather or not to do a standard LTC policy. Like some folks, I would really like some kind of catastrophic policy that would kick in after I pay out 200k or so, but have not found anything like that.
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Old 08-16-2013, 09:49 AM   #8
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Any time that a LICO invents a new product there is but two reasons to do so~income for those selling and those issuing the policy. There are a lot of folks that get in line at getting a hit off of that teat before they even think of the policy owner.

I would pass on that policy and run away...run away.
The same could be said for every policy a LICO issues - or any product a company makes. All policies are designed to make a profit, even those issued by mutual insurance companies who need to make a profit to grow surplus.
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Old 08-16-2013, 10:12 AM   #9
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Over 20 years ago, my Megacorp offered (using a life insurance company) a very similar policy. It had a set death benefit AND, could be used more-or-less as needed for LTC (assuming a demonstrated need for LTC). This was before LTCI became readily available. At the time, I had relatively little life insurance, I had recently become "rated" if I would buy on the open market, my parents had or would soon need LTC, sooo... I bought the policy. Don't recommend it, but it has given ME some peace of mind over the years - especially since we got kids to raise. The one feature that seems different is that for a few dollars extra (maybe 5%) both DW and I are covered, with the same maximum split between us if need be (IOW, not double the benefit - just available to be split).

It is paid off now, so I consider it an "asset" worth it's significant cash value. I realize that will go down as I age. Again, not an endorsement. 20 years ago, I was young and foolish. Well... foolish. Still, because I got the "standard group" rate, it has never been a burden to pay for and it is there if I need it - one way or the other. One thing I was "smart" enough to appreciate at the time was that no salesperson got a whopping commission. I'm sure the Ins. Co. made money, but buying it was a "check-off" item on our annual "benefits menu". So, YMMV.
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Old 08-16-2013, 01:50 PM   #10
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The same could be said for every policy a LICO issues - or any product a company makes. All policies are designed to make a profit, even those issued by mutual insurance companies who need to make a profit to grow surplus.
True. no one makes/sells any product that is not designed to make a profit. The trick is what can it do for you. Suppose this is different because you could self insure and not buy any product.

Has anyone ever done a poll to see how many folks have some kind of purchased LTC solution as compared to self insured?
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Old 08-16-2013, 05:17 PM   #11
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Has anyone ever done a poll to see how many folks have some kind of purchased LTC solution as compared to self insured?
There was a prior poll, but it didn't have everything I was curious about so I've done a new poll:

LTC Poll
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Hybrid LI/LTC policy
Old 11-30-2013, 02:32 PM   #12
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Hybrid LI/LTC policy

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Originally Posted by Koolau View Post
Over 20 years ago, my Megacorp offered (using a life insurance company) a very similar policy. It had a set death benefit AND, could be used more-or-less as needed for LTC (assuming a demonstrated need for LTC). This was before LTCI became readily available. At the time, I had relatively little life insurance, I had recently become "rated" if I would buy on the open market, my parents had or would soon need LTC, sooo... I bought the policy. Don't recommend it, but it has given ME some peace of mind over the years - especially since we got kids to raise. The one feature that seems different is that for a few dollars extra (maybe 5%) both DW and I are covered, with the same maximum split between us if need be (IOW, not double the benefit - just available to be split).

It is paid off now, so I consider it an "asset" worth it's significant cash value. I realize that will go down as I age. Again, not an endorsement. 20 years ago, I was young and foolish. Well... foolish. Still, because I got the "standard group" rate, it has never been a burden to pay for and it is there if I need it - one way or the other. One thing I was "smart" enough to appreciate at the time was that no salesperson got a whopping commission. I'm sure the Ins. Co. made money, but buying it was a "check-off" item on our annual "benefits menu". So, YMMV.
Just started using a FA from Ameriprise and he is advising me to buy a combination life insurance and LTC policy. It is called Moneyguard Reserve Plus. What it boils down to is, in my case, I would pay $20,000 for years 1-3, then no more premiums, for a total of $60,000. If I decide, say 10 years from now, that I no longer want the policy, I can get the $60,000 back (there is a surrender charge the first 5 years, then no surrender charge). If I just keep it and have to go into a nursing home, it would pay a maximum of $4,000/month for 6 years, for a total pool of $288,552. I could add a COLA rider, but he doesn't recommend it and says I could self-insure if the pool ran out or it cost more than $4,000 a month. If I never needed LTC, there would be a death benefit of $96,000. The whole point why he is touting this policy is because, for example, another regular LTC policy he told me about cost about $2200 a year, was only good for LTC of 3 years, with benefit of $5300 a month, but if I never used it, that money would be lost forever. On this Moneyguard policy, my kids would be getting $96,000 death benefit, minus any withdrawals made for any long-term care. Want to know what others think about this policy?
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Old 11-30-2013, 03:36 PM   #13
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Just started using a FA from Ameriprise and he is advising me...

Want to know what others think about this policy?
I think you need to run like hell.

Plug "Ameriprise" into the forum search box to see dozens of threads like these:

I Want To Leave Ameriprise

can you please tell me if my ameriprise advisor is full of crap?

Another Ameriprise ship jumper...please help

Help with rolling roth from ameriprise to vanguard?

Intro and questions about Ameriprise accounts

i'm almost out of the grip of ameriprise..but i have questions

Hi all...glad to find this site but now disgusted with myself!
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Old 11-30-2013, 03:47 PM   #14
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I think you need to run like hell.
+++1

Quote:
The whole point why he is touting this policy is because
. . .he'll make a LOT on the commission if you buy it.

The product he is recommending is not a good one. Ask your "advisor" if it qualifies for your state LTC Partnership program (Hint--it doesn't). Let him explain why that is "okay" (it isn't). Look at the likely cost of LTC when you'll likely need it (decades from now) and you'll see why inflation protection (or something like it, like "overbuying" the coverage early) is important.

The only person I'd recommend should >>maybe<< look at a plan like this is somebody who has medical issues and will not qualify for a regular LTC policy. The underwriting criteria for these types of policies can be somewhat less stringent. I think you can probably guess why--because the profit margins are so high on them.
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Old 11-30-2013, 04:05 PM   #15
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Originally Posted by Kat07 View Post
Just started using a FA from Ameriprise and he is advising me to buy a combination life insurance and LTC policy. It is called Moneyguard Reserve Plus. What it boils down to is, in my case, I would pay $20,000 for years 1-3, then no more premiums, for a total of $60,000. If I decide, say 10 years from now, that I no longer want the policy, I can get the $60,000 back (there is a surrender charge the first 5 years, then no surrender charge). If I just keep it and have to go into a nursing home, it would pay a maximum of $4,000/month for 6 years, for a total pool of $288,552. I could add a COLA rider, but he doesn't recommend it and says I could self-insure if the pool ran out or it cost more than $4,000 a month. If I never needed LTC, there would be a death benefit of $96,000. The whole point why he is touting this policy is because, for example, another regular LTC policy he told me about cost about $2200 a year, was only good for LTC of 3 years, with benefit of $5300 a month, but if I never used it, that money would be lost forever. On this Moneyguard policy, my kids would be getting $96,000 death benefit, minus any withdrawals made for any long-term care. Want to know what others think about this policy?
First, keep in mind that I'm no expert. Second, I know nothing about the policy except what you have stated. But, I'll share my ignorance with you.

60K up front seems very steep - especially when you consider that it is in "today's (almost)" dollars. If you paid $2200 for 20 years, that's only $44K and most of it is in "depreciated" dollars.

Keep in mind that most (don't know about this one) policies pay the salesman more-or-less up front (usually part of the first 3 years premiums). Your guy could be pocketing (SWAG) 10% of your $60K If he "sells" you the "regular" policy, he probably gets (SWAG again) 10% of $6600 So, if I happen to be correct (don't bet the farm - or anything else) the sales guy probably prefers to sell the "up front" policy. That in itself doesn't make it "bad", but it would mean the sales guy would be "prejudiced" toward the up-front policy.

Full disclosure: I DID buy an LTC policy at about age 52 or so. I've kept it up and it has increased in premiums to about what you are looking at (a little less than $2k/year). I considered dumping it, but 3 of our parents died in LTC units, so... Guess you'd say I'M prejudiced!

Hope some other folks here can give you more "objective' data. One thing is sure most folks on this forum seem to be prejudiced against most forms of insurance (with the possible exception of term life). YOU have to decide if you need coverage or can go naked. I'd be the first to say that, if you can afford to self-insure, that's usually a better way to go, because you aren't paying sales charges or insurance "fees". Still, for some of us, there is a peace of mind with having insurance to cover things that seem to be a major possibility. Don't forget, as always, YMMV so do your own research - including asking the sales guy how (and how much) he gets paid!! Good luck.
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Old 12-02-2013, 04:47 PM   #16
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Thanks for the input. Wish I would've researched Ameriprise BEFORE I signed up with them. So far I've paid $299 for financial planning, plus they took out $50 for month of October (they charged $299 initially, then $50/month the first year, then $50 a month from then on). It says in the customer brochure that I want to terminate, I fill out a cancellation/refund request and will get all my money back IF i have not received my written plan/recommendations yet...which I have not, after 2 months! Most of our phone calls have been him getting my financial information from me, plus the last couple phone calls have been solely trying to sell me products...this LTC policy and also a variable annuity. My FP seems like a very nice guy, but I'm afraid it turns out he might not have my best interests in mind, just making commissions. Do you think I have a chance of getting my money back? Do you think I should send the cancellation form back certified mail? Otherwise, I fear that might say they never got it and send in my written financial plan to me so they dont' have to send me any refund. Arrrghhh...
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Old 12-02-2013, 04:51 PM   #17
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I do think a regular LTC policy might be worth it, but what if initially I start paying $2200 a year, then the premiums jump way up in the future? Do any policies have a locked-in rate?
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Old 12-02-2013, 04:53 PM   #18
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\ Do you think I should send the cancellation form back certified mail? Otherwise, I fear that might say they never got it and send in my written financial plan to me so they dont' have to send me any refund. Arrrghhh...
Absolutely.
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Old 12-02-2013, 04:59 PM   #19
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LTC combined with Life Insurance is a new product and I think the jury is still out on it.

LTC insurers made a mistake in earlier policies. They figured that most of the insured would either die early, or drop the policy within a few years. However, people held on to them, and now the insurers are paying out huge amounts they had not expected to pay.

Thus, current policies are at the other extreme - far to expensive and with to great a risk that one will be priced out of the policy as the probability of needing to use it rises.

My LTC insurance consists of the extra 5 years of service I paid for when I got my pension (partial COLA) and delaying SS to age 70. If I never need LTC, I will spend most of the money on enjoying life.
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Old 12-02-2013, 05:37 PM   #20
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Do you think I should send the cancellation form back certified mail? Otherwise, I fear that might say they never got it and send in my written financial plan to me so they dont' have to send me any refund. Arrrghhh...
Yes, that's a very good move. And state in the letter that you haven't received your financial plan. And when the "advisor" calls asking you to reconsider, make it absolutely clear that you want your money back immediately. I know this is all a pain in the neck, but you are very lucky you caught this before signing up for the LTC policy or (especially) the annuity.

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I do think a regular LTC policy might be worth it, but what if initially I start paying $2200 a year, then the premiums jump way up in the future? Do any policies have a locked-in rate?
Virtually all of the "inflation adjusted" policies have a locked-in rate, but it's not an ironclad guarantee. The industry has a long history of raising rates. In general they can't raise rates on just a single policyholder, but must do it on a whole group of people who bought the same product. The increase normally must be approved by state regulators, but these increases have been fairly common.
Don't rush into the purchase of LTC insurance, it's a complicated product, and a lot of people have paid much more than they should. Even good policies are quite expensive (compared to term life insurance, etc). It's probably in the top 10 subjects we discuss on this board, and a lot of very useful information is available right here.

Good luck, and congratulations on making the decision to be free of Ameriprise.
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