How Are Life Insurance With LTCI Rider Sold?

[easysurfer]

Where to Get Life Insurance with LTCI Rider?

Where can one get a Life Insurance policy with LTCI Rider?

To ask another way, can one get coverage through same insurance company for auto, home (like through State Farm, Allstate)? Since these companies sell life insurance anyhow, how about just add a rider?

Or are they sold only through agents/companies that specialize in this sort of thing?

 

[RetireeRobert]

You would have to ask each company that does sell life if they have LTC riders available. I would suggest going to agents for some of the companies mentioned to ask about it.

Otherwise, with life and LTC each being somehwhat their own separate baliwicks in the insurance world, I would also go inquire of agents who specialize in life and LTC.

Doesn't hurt to get several different approaches to having some LTC coverage.

Also check with your employer HR department, maybe there are group LTC policies and/or life policies that might have LTC riders option avaiable at favorable rates for you.

 

[RetireeRobert]

Found this State Farm webpage which may help you. It speaks to the topic of life insurance with a rider for LTC
(residents of CA and NY excepted!):
https://www.statefarm.com/insurance...al-life-insurance/flexible-care-benefit-rider

 

[qwerty3656]

Does this stuff make sense financially if your already old? I would think you would have to buy this stuff in your 40's (maybe early 50's) to get a reasonable rate?

 

[easysurfer]

Thanks for the suggestions.

Gets me how the process of seeking out LTC insurance is kind of shrouded in mystery. All they while hearing both sides as you really want to get LTCI vs you really don't need to get LTCI. Okay, off my soapbox .

 

[jazz4cash]

Does this stuff make sense financially if your already old? I would think you would have to buy this stuff in your 40's (maybe early 50's) to get a reasonable rate?

I think it can make a lot of sense. Buying LTC in your 40’s ain’t exactly cheap and the likelihood of needing it is quite low. I guess it could be a form of disability. I looked in my 40’s and my 50’s and I thought it was too high. Now in my mid 60’s it looks reasonable especially given the 10’s of thousands saved by not having it all these years. The policy I’m looking at says you should not spend over 7% of income for LTCi. I think of it as a benefit to my heirs. I am going through underwriting now and I could take it or leave it. The big unknown is future price increases.

 

[RE2Boys]

Maybe this article may be of help. It lists some companies that offer single premium life with long term care.

https://www.ltcipartners.com/blog/everything-you-need-to-know-about-single-pay-ltc-insurance

 

[OldShooter]

I'd suggest starting with independent insurance agents, not tied agents like State Farm, Allstate, etc. An independent agent will know about many markets and what might be found out there in terms of price, coverage and service.

No matter what the fine print says, a tied agent works for the company he's tied to. He will not be shopping your business looking for low prices. He will also not be as effective in a dispute as an independent agent who represents you and who is writing other business with the insurance company he's dealing with in the dispute.

You might even be able to find an independent agent who specializes in the LTC market.

 

[RetireeRobert]

Maybe this article may be of help. It lists some companies that offer single premium life with long term care.

https://www.ltcipartners.com/blog/everything-you-need-to-know-about-single-pay-ltc-insurance

Single premium hybrid LTC/life, as discussed in the linked article, is what I have.

My two big mental blocks when I was shopping for LTC was (1) what if we never need LTC, then all the premiums will have been wasted; and (2) what about all those pesky premium increases (or coverage reductions) I keep hearing about on traditional LTC policies, sometimes years down the road after years of paying premiums.

Single premium hybrid policy solved them: (1) If it turns out the LTC coverage is never used, then the life insurance feature pays a mulitple of your single premium to your heirs as tax free life insurance proceeds. So, premiums were "not wasted". (2) With a single premium hybrid, the premium is paid and done with---so "never any increase" or even any chance for a premium increase over the years.

Single premium hybrids also have the option of being paid for over ten years and done---with still no chance of ever a premium increase years down the road.

 

[ProGolferWannabe]

Single premium hybrid LTC/life, as discussed in the linked article, is what I have.

My two big mental blocks when I was shopping for LTC was (1) what if we never need LTC, then all the premiums will have been wasted; and (2) what about all those pesky premium increases (or coverage reductions) I keep hearing about on traditional LTC policies, sometimes years down the road after years of paying premiums.

Single premium hybrid policy solved them: (1) If it turns out the LTC coverage is never used, then the life insurance feature pays a mulitple of your single premium to your heirs as tax free life insurance proceeds. So, premiums were "not wasted". (2) With a single premium hybrid, the premium is paid and done with---so "never any increase" or even any chance for a premium increase over the years.

Single premium hybrids also have the option of being paid for over ten years and done---with still no chance of ever a premium increase years down the road.

I’ve never understood the thinking that if “we never need LTC, then all the premiums [in a traditional policy] are wasted”. The entire point of purchasing insurance is to pool risk…not to prepay for some known or anticipated expense. The fact that one never needs to file a LTC claim (or an auto claim, or homeowners claim, etc.) doesn’t mean the premiums were wasted. It means you were lucky or had good fortune and never experienced the financial misfortune that you were insuring yourself against. Insurance is intended (and should be purchased) to protect you from financial devastation, not provide a payout at some point in the future. Is a traditional LTC policy the best way to protect yourself against a loss? Maybe, maybe not.

I have a traditional LTC policy and I have had it since my mid 40’s. I am 59 now. The premiums have definitely increased in recent years (or in my case, I took a reduction in benefits to offset the premium increase). Kinda sucks. In a single premium policy, you are correct, that risk is eliminated, however, one is most definitely paying to eliminate that risk…the single premium price is inflated to protect the insurance company against potential cost increases. This is not necessarily a bad thing (locking in your premium costs) but the question again comes down to cost. What is the insurance company charging you to lock in a fixed price? Basically you are buying insurance against future price increases on another insurance product. I can definitely see a case where depending on cost and risk tolerance of the policyholder, the single premium option makes sense. I can see where it wouldn’t as well.

 

[RetireeRobert]

I’ve never understood the thinking that if “we never need LTC, then all the premiums [in a traditional policy] are wasted”. ........


....…the single premium price is inflated to protect the insurance company against potential cost increases. This is not necessarily a bad thing (locking in your premium costs) but the question again comes down to cost. What is the insurance company charging you to lock in a fixed price? Basically you are buying insurance against future price increases on another insurance product. I can definitely see a case where depending on cost and risk tolerance of the policyholder, the single premium option makes sense. I can see where it wouldn’t as well.

Your first point, "you've never understood" idea of "premiums wasted if LTC never used" obviously does not apply to everyone. Many such as myself have that objection and could not bring ourselves to buy traditional LTC without knowing there would be "some" definite payoff for that premium (i.e., a mulitple of the single premium paid as life insurance).

Second point, about locking in one's premium costs via single premium: As long as the policy pays off a multiple of that single premium as either life isnurance or LTC benefits, you in a sense get the LTC coverage for whatever number of years at no cost, and make a "profit" besides. More money is paid out to you or your heirs than you paid in.

What you give up is part of the investment return on that single premium for whatever the number of years are in your actuarial life expectancy. (Hence the oft stated objection of some to any LTC insurance and their proclamation they will "self-insure", that is they will invest the money themselves and use that to pay their LTC costs). If one thinks they are better investors than the insurance company, AND that investment markets will not be in a downturn at the critical time of need, AND that the critical need will NOT occur early on before theor investment has time to grow adequately, then by all mean self-insure and invest your own money for it. I am willing to give up "some" of the time value of money for the single premium hybrid policy solving "all" those problems for me.

I am quite happy with my hybrid Life/LTC policy which covered both my wife and I under one policy. I view it as a valuable asset and an ingenious tool.

YMMV

 

[ProGolferWannabe]

Your first point, "you've never understood" idea of "premiums wasted if LTC never used" obviously does not apply to everyone. Many such as myself have that objection and could not bring ourselves to buy traditional LTC without knowing there would be "some" definite payoff for that premium (i.e., a mulitple of the single premium paid as life insurance).

Second point, about locking in one's premium costs via single premium: As long as the policy pays off a multiple of that single premium as either life isnurance or LTC benefits, you in a sense get the LTC coverage for whatever number of years at no cost, and make a "profit" besides. More money is paid out to you or your heirs than you paid in.

What you give up is part of the investment return on that single premium for whatever the number of years are in your actuarial life expectancy. (Hence the oft stated objection of some to any LTC insurance and their proclamation they will "self-insure", that is they will invest the money themselves and use that to pay their LTC costs). If one thinks they are better investors than the insurance company, AND that investment markets will not be in a downturn at the critical time of need, AND that the critical need will NOT occur early on before theor investment has time to grow adequately, then by all mean self-insure and invest your own money for it. I am willing to give up "some" of the time value of money for the single premium hybrid policy solving "all" those problems for me.

I am quite happy with my hybrid Life/LTC policy which covered both my wife and I under one policy. I view it as a valuable asset and an ingenious tool.

YMMV

If you are buying a product where you pay in advance expecting a return of some, all, or more than you paid as a benefit in the future, you are not buying insurance. You are prepaying for that expense. If you buy a product where you pay in advance knowing that you may never receive a financial return, but instead will be paid only if certain events or circumstances come to pass, you are buying insurance. You are protecting yourself against the chance of that event’s occurrence with the understanding that event (and associated payout) may never occur. You are paying someone else to take that risk on your behalf. If you end up needing assistance when you are elderly, the insurer pays out. If you don’t, the insurer keeps the money, and you got A PERIOD OF TIME WHERE YOU DID NOT HAVE TO BEAR THE RISK OF LTC COSTS. Homeowner’s insurance is really no different. One does not purchase a homeowner’s policy with the expectation of getting “some definite payoff for the premium”. (To use your words.) If your house burns down, then yes, one would expect the insurer to meet its financial promise, but it is contingent on the house burning down….which I think we can both agree we don’t want to happen. If you believe traditional LTC policies don’t represent a good value as a means of protecting against needing care, that makes complete sense, and there are other options available…your chosen product, self insuring, praying that nothing bad happens, etc.

 

[ncbill]

Just make sure it really is a one-time payment for a plain-vanilla whole life policy, not universal...years ago an agent tried to get me to convert an old WL policy to a universal policy w/ LTC rider...guaranteed illustration had the policy "blowing up" in my 60s...

 

[SecondCor521]

The policy I’m looking at says you should not spend over 7% of income for LTCi.

Heh. I'm suspicious of budgeting category percentage advice from a company wanting to sell me a product in that budgeting category. I'm 52 and I spend right about 7.1% of my expenses on *all* insurance, including auto, home, umbrella, and medical. That figure excludes both life and LTC, which I don't buy and don't plan to buy. All things considered and given my circumstances, I prefer to retain the risk myself.

 

[RetireeRobert]

If you are buying a product where you pay in advance expecting a return of some, all, or more than you paid as a benefit in the future, you are not buying insurance. You are prepaying for that expense......

Therefore, life insurance, which everyone buys pretty much knowing it will pay off (to their heirs) more than they paid in premiums, is "not insurance", it is some kind of pre-paid expense?

 

[RetireeRobert]

If you end up needing assistance when you are elderly, the insurer pays out. If you don’t, the insurer keeps the money, and you got A PERIOD OF TIME WHERE YOU DID NOT HAVE TO BEAR THE RISK OF LTC COSTS.

With single premium life/LTC hybrid "insurance" policy, if you end up needing assistance when you are elderly, the insurer pays out. If you don't, the insurer keeps the single premium you paid, and you got a PERIOD OF TIME WHERE YOU DID NOT HAVE TO BEAR THE RISK OF LTC COSTS.

Additionally, the insurer is taking that single premium lump and investing it. They are grouping the risk actuarially, so that they will be able to pay your LTC costs "early on" (say you need LTC 4 months after you buy the policy) before you as an individual would have a chance to grow your own investment funds. Furthermore, the insurer is grouping the risk actuarially, so that say twelve years after you buy the policy and then need LTC care, the investment markets have suffered a sharp drop at that critical time, making you unable on your own investing to have the needed funds, but the insurer can still pay. Furthermore, the insurer is grouping actuarially the risk that people will live long enough such that the insurer can invest and make the sum needed to pay off the life insurance feature of the hybrid policy as well as a profit margin for themselves for taking all these risks.

I call all those features "insurance". YMMV

 

[ProGolferWannabe]

Therefore, life insurance, which everyone buys pretty much knowing it will pay off (to their heirs) more than they paid in premiums, is "not insurance", it is some kind of pre-paid expense?

No. When I speak of life insurance, I am speaking of a term policy which is pure insurance. I’m not talking about whole life, universal life, etc. which have some investment component to them. You hold a term policy…it pays out nothing unless you die during the term. Just like LTC. My guess is that most people never collect on term policies…they are purchased to protect their family so the mortgage and kids college can be paid off. Once the kids are gone and the house is paid off, I suspect most people drop heir policies.

 

[ProGolferWannabe]

With single premium life/LTC hybrid "insurance" policy, if you end up needing assistance when you are elderly, the insurer pays out. If you don't, the insurer keeps the single premium you paid, and you got a PERIOD OF TIME WHERE YOU DID NOT HAVE TO BEAR THE RISK OF LTC COSTS.

Additionally, the insurer is taking that single premium lump and investing it. They are grouping the risk actuarially, so that they will be able to pay your LTC costs "early on" (say you need LTC 4 months after you buy the policy) before you as an individual would have a chance to grow your own investment funds. Furthermore, the insurer is grouping the risk actuarially, so that say twelve years after you buy the policy and then need LTC care, the investment markets have suffered a sharp drop at that critical time, making you unable on your own investing to have the needed funds, but the insurer can still pay. Furthermore, the insurer is grouping actuarially the risk that people will live long enough such that the insurer can invest and make the sum needed to pay off the life insurance feature of the hybrid policy as well as a profit margin for themselves for taking all these risks.

I call all those features "insurance". YMMV

Makes sense to me.

 

[SecondCor521]

Where can one get a Life Insurance policy with LTCI Rider?

To ask another way, can one get coverage through same insurance company for auto, home (like through State Farm, Allstate)? Since these companies sell life insurance anyhow, how about just add a rider?

Or are they sold only through agents/companies that specialize in this sort of thing?

I wouldn't buy this sort of thing, but apparently Brighthouse Financial sells this kind of product. They're advertising it on the golf tournament today.