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Old 10-04-2017, 05:19 PM
 
216 posts, read 114,196 times
Reputation: 168

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Quote:
Originally Posted by mathjak107 View Post
read what kitces said about it . it is right there .

I did read, and again he is talking about non guaranteed values. No one buys these plans on non guaranteed values. I suggest you reread the article and I think you will understand what I am speaking of.
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Old 10-04-2017, 05:20 PM
 
Location: Philadelphia/South Jersey area
2,871 posts, read 1,401,499 times
Reputation: 10071
Quote:
Originally Posted by Pintail07 View Post
His argument against is totally irrelevant. Folks mainly buy this product for the guarantees. Fluctuating interest rates and crediting methods are rarely part of the decision making.
thats what I was thinking. most folks I know that have this have other funds invested that bring in interest and dividends..

I don't "cross" my portfolios.
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Old 10-04-2017, 05:20 PM
 
71,508 posts, read 71,674,131 times
Reputation: 49084
Quote:
Originally Posted by Pintail07 View Post
What do you see as "bad product'? What would you say are the bad parts? Rates can never be changed, benefits can never be changes except to increase/
as kitce's stated

the reality is that the guarantee of LTC premiums in a hybrid policy may be entirely offset by the fact that the insurance company controls the cash value, and is under no obligation to pay a going rate of return, especially if interest rates rise.

In other words, it doesn’t really matter that the insurance company can’t increase the premiums on the policy by $4,000/year, when the company can simply under-pay on the interest rate by $4,000/year to accomplish the same result! And while the cash value of a hybrid LTC policy generally does remain liquid, taking a withdrawal to reinvest to get better, higher rates would entail surrendering the policy and forfeiting the LTC coverage! In fact, for some types of hybrid LTC policies, the arrangement contractually provides no rate of return to the client at all, and is essentially the equivalent of the client selling a call option on interest rates to the insurance company, where the more rates rise the greater the company wins at the expense of the client!
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Old 10-04-2017, 05:27 PM
 
216 posts, read 114,196 times
Reputation: 168
Quote:
the reality is that the guarantee of LTC premiums in a hybrid policy may be entirely offset by the fact that the insurance company controls the cash value, and is under no obligation to pay a going rate of return, especially if interest rates rise.
Totally incorrect, guarantees cannot be changed or offset.

Quote:
And while the cash value of a hybrid LTC policy generally does remain liquid, taking a withdrawal to reinvest to get better, higher rates would entail surrendering the policy and forfeiting the LTC coverage! In fact, for some types of hybrid LTC policies, the arrangement contractually provides no rate of return to the client at all, and is essentially the equivalent of the client selling a call option on interest rates to the insurance company, where the more rates rise the greater the company wins at the expense of the client!
No one buys this policy with the intent to pull out cash values to invest at better rates. Rate of return is totally irrelevant.
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Old 10-04-2017, 05:28 PM
 
Location: Philadelphia/South Jersey area
2,871 posts, read 1,401,499 times
Reputation: 10071
But how is that riak any different than LTC where if you don't need it you've lost 10 of 10000s of bucks that an insurance company still controls or are you saying that these policies skills you to get cash out??
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Old 10-04-2017, 05:30 PM
 
216 posts, read 114,196 times
Reputation: 168
If you never make a claim they return all premiums.
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Old 10-04-2017, 06:24 PM
 
71,508 posts, read 71,674,131 times
Reputation: 49084
Quote:
Originally Posted by Pintail07 View Post
Totally incorrect, guarantees cannot be changed or offset.



No one buys this policy with the intent to pull out cash values to invest at better rates. Rate of return is totally irrelevant.
no , the guarantees are not changed . they just deduct it from your interest effectively taking their increases that way .
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Old 10-04-2017, 06:29 PM
 
216 posts, read 114,196 times
Reputation: 168
Quote:
Originally Posted by mathjak107 View Post
no , the guarantees are not changed . they just deduct it from your interest effectively taking their increases that way .
So, how does that impact the policy guarantees negatively. I don't know how to explain any simpler.
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Old 10-04-2017, 06:34 PM
 
71,508 posts, read 71,674,131 times
Reputation: 49084
it can end up costing you more in the long run in what you give up than just getting a regular policy .

for what it would have cost us to tie up that sum of money in a hybrid and get no to low returns we could invest that money normally and for just a piece of the long term average gains buy a full featured ltc policy and have gains left over .

we crushed the idea of a hybrid . they are terrible deals and there are better plans that work out costing less in the long run . .
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Old 10-04-2017, 06:40 PM
 
216 posts, read 114,196 times
Reputation: 168
We will have to agree to totally disagree. Good luck with your plan.
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