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1 Confidential and Proprietary 1 Traditional vs. Hybrid LTC insurance Understanding the Options Tony Stratidis Managing Partner MS Consulting Group LLC
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Traditional vs. Hybrid LTC insurancelifeforagents.s3.amazonaws.com/docs/advanced-sales-forum/2014/… · Traditional vs. Hybrid LTC insurance ... Linked-Benefit LTCI . Can be more

Jul 12, 2020

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Page 1: Traditional vs. Hybrid LTC insurancelifeforagents.s3.amazonaws.com/docs/advanced-sales-forum/2014/… · Traditional vs. Hybrid LTC insurance ... Linked-Benefit LTCI . Can be more

1 Confidential and Proprietary

1

Traditional vs. Hybrid LTC insurance

Understanding the Options

Tony Stratidis Managing Partner

MS Consulting Group LLC

Page 2: Traditional vs. Hybrid LTC insurancelifeforagents.s3.amazonaws.com/docs/advanced-sales-forum/2014/… · Traditional vs. Hybrid LTC insurance ... Linked-Benefit LTCI . Can be more

“Linked-benefit LTCI is neither better, nor worse than traditional LTCI …

… it’s simply a different way to pay.“

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3 Confidential and Proprietary

3

Traditional LTCi Traditional LTCI

“Defined Benefit” 4 key benefit decisions drive the premium

1. Benefit Amount 2. Benefit Period (pool of $) 3. Inflation: 2%, 3%, 4%, 5% compound or simple 4. Elimination Period (Deductible)

Partnership eligible (with proper inflation)

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4 Confidential and Proprietary

4

Advantages & Disadvantages of Traditional LTCI

• Flexibility in plan design and premium control • Tax-deductible premiums • On-going premium (some limited pay options

still available) • Premiums can increase • Tighter Underwriting • Partnership: Protection of Assets • Peace of Mind

Page 5: Traditional vs. Hybrid LTC insurancelifeforagents.s3.amazonaws.com/docs/advanced-sales-forum/2014/… · Traditional vs. Hybrid LTC insurance ... Linked-Benefit LTCI . Can be more

Linked-Benefit LTCI Also referred to as:

– Hybrid product; Linked – Asset-based; Combo

Different from Life Policies with Accelerated Death Benefit (ADB) Rider • Life-linked – WL & Universal –

Indemnity & Reimbursement • Annuity-linked

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Linked-Benefit LTCI “Defined Contribution” •The premium determines the benefit

– Can “back-into” the premium • Payment Options:

– Single-premium – Limited & annual-pay options – Lifetime Pay

•Guarantees – No “Rate Increase” – Interest Rate – Death Benefit – Lifetime Benefits available

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Things to keep in mind with Linked-Benefit LTCI

Can be more expensive than traditional LTC May not produce enough benefit No tax deduction of premium Limitations by State approval Not Partnership eligible

Page 8: Traditional vs. Hybrid LTC insurancelifeforagents.s3.amazonaws.com/docs/advanced-sales-forum/2014/… · Traditional vs. Hybrid LTC insurance ... Linked-Benefit LTCI . Can be more

• Stuck on “Use it or Lose it”syndrome • Against annual premium “expense” • Concerned about future Rate Increases • Wants to “Self-insure”

– “Smarter way to self-insure.” - Leverage – “Reposition” portion of emergency funds

• NOT concerned w/Partnership asset protection

Client Profiles that Gravitate to Hybrid LTCi

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LIFE INSURANCE AND LTC COMBINED…HOW DOES IT WORK

“3-Buckets” • Single premium most common

– Limited pay available • “Pre-packaged” CoB (or “Extension of Benefits”)

Premium $100,000

CV

Death Benefit

$200,000

LTCI Benefit $500,000

($7000/mo x 6 years)

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LIFE INSURANCE AND LTC COMBINED…

HOW DOES IT WORK

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Asset Based vs. Traditional LTC Products Underwriting

Traditional LTC: Morbidity Based Health History Application Attending Physicians Statements (APS) Phone History Interview (PHI) Face To Face Interviews Paramedic Exam – most carriers now requiring

Asset Based LTC: Morbidity & Mortality Based <$250K Death Benefit – underwritten off application only Health History Application Attending Physicians Statements (APS) Paramedic Exam

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Case Study 1: Lifetime Payment

Plan Design: Client: Traditional LTC Hybrid Mr. Jones – age 58 $5,530.00 $6,300.00 Ms. Jones – age 55 Benefit Plan 4 Year 50 Month $6000 Monthly Benefit 3% Compound Inflation 60 Day Elimination Period

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Case Study 2: 10 Year Pay Option

Plan Design: 10 Year Pay with Return of Premium Client Traditional LTC Hybrid Mr. Jones – age 58 $10,777.71 $21,000.00 Ms.Jones – age 55 Benefit Plan: 4 Year 50 Month $6000 Monthly Benefit 3% Compound Inflation 60 Day Elimination Period Premium Returned $107,777.10 $297,661.00

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Case Study 3: Single Premium Option

Client: Traditional LTC Asset Based Mr. Jones – age 58 N/A $175,000 Ms. Jones – age 55 LTC Benefit 4 Year 50 Month $6000 Monthly Benefit 3% Compound Inflation 60 Day Elimination Period Premium Returned $290,244 Death Benefit N/A $290,244

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Client Wants Lifetime Benefits:

Plan Design: Single Premium Client: Traditional LTC Asset Based Mr. Jones – age 58 N/A $225,683.28 Mrs. Jones – age 55

Lifetime Monthly Benefit Plan $6000 Monthly Benefit

3% Compound Inflation 60 Day Elimination Period

Premium Returned $290,244.00

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Anthony C. Stratidis, CLTC, LTCP

Managing Partner MS Consulting Group LLC Long Term Care Planning Consultants Phone: 1.800.991.5198

email: [email protected]