LTC Premium Did You Know

This past week, Kelly Hall from OneAmerica’s Advanced Markets team joined Michael and me on LTC Coffee break. If you did not have a chance to catch it, you can watch it or any of our past episodes on the LTC Coffee Break Channel.

This week, I want to play a little game with you called did you know.

Did you know that …

• premiums for the continuation of benefits rider on Care Solutions products may be deductible to individuals and in business funded cases
• premiums when paid on a recurring basis are guaranteed
• the continuation of benefits rider premium can be funded from a Health Savings Accounts
• both Asset Care and Annuity Care allow for the base policy to be funded with a lump sum and the continuation of benefits rider premiums can be paid on a recurring basis
• with an Asset Care funded using the OneAmerica turn-key AFWL strategy, an IRA from one spouse can still be used to fund the premium for the other spouse’s policy if they are uninsurable
• qualified money can be used to fund Annuity Care but the continuation of benefits rider would need to be funded using post-tax dollars
• in the turn-key AFWL Asset Care strategy, distributions from the qualified annuity that are applied to premiums for the Asset Care policy can be counted toward required minimum distributions if the client is at RMD age

You may know these tidbits of premium information but I but you don’t know this.

Most people, when comparing Asset Care to a product from our peers do a total disservice to Asset Care by not objectively comparing the products. An assumption is often made that Asset Care is not competitive for individual cases, at younger ages, with inflation … that is false. The problem lies in the way it is being illustrated.

Most of our peers illustrate their solutions using a 6 year (72 month) duration strategy simply because they do not offer lifetime benefits. Asset Care with lifetime benefits will almost always lose in that comparison. Make it a fair and illustrate Asset Care using a 4% acceleration rate (25 months) for the base and the 50 months limited duration continuation of benefits rider.

Just this past week, I had a situation arise where I was contacted and told that Asset Care wasn’t competitive for an female, age 60, in good health. I asked for the illustrations for both products. Here is what I found, the “competing product” was illustrated using premiums payable to age 100, a 6 year (72 months) benefit duration, and 3% compound inflation. Asset Care was illustrated with premiums payable for 20 years, lifetime benefits, and a 3% inflation rate for 20 years. The “competing product” was significantly lower.

I hope that you see a few issues with this comparison.

If anything, I am fair. So, not knowing how Asset Care would stack up, I ran an illustration using the annual premium of the “competing product” payable to age 95, solving for the monthly LTC benefit, and 3% compound inflation for botht eh base and continuation of benefits rider and using the 75 months benefit duration. Asset Care won!!!!!

For $6,123 annually, the “competing product” produced a first year benefit of $2,500; Asset Care was $2,833. Both grew at a rate of 3% compound for the duration of the policy and given the higher starting point Asset Care provided more benefit. An additional fact that was not known by the agent was that Asset Care offers a full waiver of premium at claim – the “competing product” only waived a portion of the premium.

Next, I took a look at how much it would cost for lifetime benefits using the same base and inflation scenarios. The premium increased to $6,981.

Then, I dialed it down to the lower monthly benefit starting point of the “competing product” and the Asset Care premium was $5,832.

Give me a call with your next asset based LTC case. At worst, I will confirm whether we can compete and win or not. At best, you have options that you might not have known about.

You can contact me via email at kevin.fisher@oneamerica.com or call me at (678) 512-9627. Or, your can speak with my internal Justin Fox by calling him at (844) 658-3725.

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If you happen to be in the Mt. Laurel area on September 21, I am hosting what we are calling our “Regional” Care Solutions University. Space is limited and registration is required.

I hope that you will join us …