So, have a client interested in Long Term Care insurance (LTCi), with some provisos. First, they are very concerned about potential rate increases. Second, they want to deal with only top-rated carriers, and third, they really don't care about Partnership compliance. So we ran our usual pre-screen process (which vets financial suitability and medical history) and went to town.
Here's what we came up with, and I thought it might be of interest to our readers:
We start with a monthly benefit of $6,000 (client's request), a three year benefit period and a 3% inflation guard. Both plans include the "shared care" benefit.
Company A offers a "traditional," pay-as-you-go product, and the initial annual premium for this is $5,400, which yields a total pool of $430,000 for their long term care needs.
Company B is what we call "one-and-done;" that is, they make an initial, one-time deposit ($150,000 in this case), which yields a total pool of $610,000 (about 30% higher than Company A).
Flash forward 10 years, and Company A's received $54,000, and the pool has grown to $590,000. But, if my clients quit or die, they get back exactly $0. And that assumes that there've been no rate increases.
Company B has received nothing past the initial $150,000, and its pool has grown to over $700,000. But here's the thing: if they quit, they get back almost all the money they'd deposited, and if they die, they (well, their beneficiaries) get back twice as much as they'd put in (and tax-free, to boot).
Plus, they have the peace of mind that comes from knowing that they will never see a rate increase.
Pretty cool.
[Thanks to FoIB Randy G!]
Here's what we came up with, and I thought it might be of interest to our readers:
We start with a monthly benefit of $6,000 (client's request), a three year benefit period and a 3% inflation guard. Both plans include the "shared care" benefit.
Company A offers a "traditional," pay-as-you-go product, and the initial annual premium for this is $5,400, which yields a total pool of $430,000 for their long term care needs.
Company B is what we call "one-and-done;" that is, they make an initial, one-time deposit ($150,000 in this case), which yields a total pool of $610,000 (about 30% higher than Company A).
Flash forward 10 years, and Company A's received $54,000, and the pool has grown to $590,000. But, if my clients quit or die, they get back exactly $0. And that assumes that there've been no rate increases.
Company B has received nothing past the initial $150,000, and its pool has grown to over $700,000. But here's the thing: if they quit, they get back almost all the money they'd deposited, and if they die, they (well, their beneficiaries) get back twice as much as they'd put in (and tax-free, to boot).
Plus, they have the peace of mind that comes from knowing that they will never see a rate increase.
Pretty cool.
[Thanks to FoIB Randy G!]
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