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Old 10-14-2017, 10:03 AM
 
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This thread and the various opinions makes me feel good about our plan. Yes overkill but comforting.
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Old 10-14-2017, 06:36 PM
 
3,262 posts, read 3,002,974 times
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Quote:
Originally Posted by mathjak107 View Post
sounds almost like a hybrid life/ltc policy
These policies are really good on paper. Also, the two companies issuing them (Nationwide and Lincoln National) are solid. If you can offload some of your cost to the state through state partnership plans which play nice with Medicaid then that could be better but absent that the joint policies are really nice.

That said, move fast there because I think these were underpriced and won't be available forever at current rates. Lincoln National already raised the price on theirs by double digits once. Actuarial review is coming in Q3 earnings AFAIK and I have recently sold my stock (made a lot of money on LNC) ahead of that incase it gets ugly (I spent several hours researching but couldn't find anywhere how much premium they had written, which they will presumably take a write off on equal to or more than the premium increase). Take advantage of the ability to buy a policy which has probably been badly mispriced, from companies with enough other business not to go under as a consequence of it, and where you are insulated from annual premium increase (because there is none) while you still can.
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Old 10-14-2017, 09:55 PM
 
Location: LTCShop.com
236 posts, read 113,129 times
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Quote:
Originally Posted by ALackOfCreativity View Post
These policies are really good on paper. Also, the two companies issuing them (Nationwide and Lincoln National) are solid. If you can offload some of your cost to the state through state partnership plans which play nice with Medicaid then that could be better but absent that the joint policies are really nice.

That said, move fast there because I think these were underpriced and won't be available forever at current rates. Lincoln National already raised the price on theirs by double digits once. Actuarial review is coming in Q3 earnings AFAIK and I have recently sold my stock (made a lot of money on LNC) ahead of that incase it gets ugly (I spent several hours researching but couldn't find anywhere how much premium they had written, which they will presumably take a write off on equal to or more than the premium increase). Take advantage of the ability to buy a policy which has probably been badly mispriced, from companies with enough other business not to go under as a consequence of it, and where you are insulated from annual premium increase (because there is none) while you still can.
single premium hybrids are great for the insurance company... LOUSY for the consumer.
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Old 10-14-2017, 10:17 PM
 
3,262 posts, read 3,002,974 times
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Quote:
Originally Posted by LTCShop View Post
single premium hybrids are great for the insurance company... LOUSY for the consumer.
The (moneyguard II) policies were repriced upward in April by 10-20%. Lincoln National underpriced the policies and because they are single premium they can't recover the money through rate hikes. If you bought a policy before the reeavulation you now have a policy worth more in expected value than you paid for it, and I don't have the claims data to know for certain but I strongly suspect the policy is still underpriced (ditto Nationwide's) and will be revised again down the road. Buying a dollar with seventy five cents ain't lousy by any means.

Caveat that this conclusion came from a couple hours of research and cranking the data I could find through excel. Is there some devil-in-the-details practical problem with the plans that isn't immediately apparent?
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Old 10-15-2017, 01:57 AM
 
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hybrids are not good for the most part. they can end up so expensive . i posted kitces's review of them earlier and i agree 100%
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Old 10-15-2017, 06:30 AM
 
Location: Central Massachusetts
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Like I learned while studying insurance broker test which I passed insurance is only good for the consumer when it does one thing, insure. Getting a product that covers more than one thing never works in the favor of the consumer. Even bundling at a single insurance company your products might not be the best deal either. It might in the beginning but once you become like a warm comfortable pair of shoes to the company then they think they own you and before long your costs for the same product goes up dramatically in spite of your long association with them.
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Old 10-15-2017, 07:08 AM
 
216 posts, read 114,196 times
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Quote:
hybrids are not good for the most part. they can end up so expensive . i posted kitces's review of them earlier and i agree 100%
How can they become more expensive when rates and benefits are GUARANTEED? Impossible.
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Old 10-15-2017, 07:12 AM
 
71,511 posts, read 71,674,131 times
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easy . i posted this earlier but here it is again .


Executive Summary
As traditional long-term care (LTC) insurance becomes more and more expensive, and interest rates remain at ultra-low levels, planners and their clients have become increasingly interested in so-called “Hybrid LTC” policies that match together a life insurance or annuity policy with LTC coverage, especially with a more favorable set of tax rules that took effect in 2010. For many, though, the primary appeal of hybrid policies is the simple fact that, unlike their traditional LTC insurance brethren, the premiums really are guaranteed and cannot be increased in the future. Given some of the extraordinarily large premium increases that traditional LTC coverage has experienced in recent years – especially for some of the early policies issued in the 1990s and early 2000s – a cost guarantee is remarkably reassuring.

Yet 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!

Given the unique structure of hybrid LTC policies, though, there are still several circumstances where they may be appropriate, despite the concerns about how they may perform in a rising rate environment. In some cases, simplified underwriting provides a way to get coverage for those who otherwise couldn’t get any, and in other scenarios, the favorable tax treatment alone can make a hybrid policy compelling as a place to park an existing appreciated annuity. Nonetheless, the bottom line is that in today’s environment, consumers must be careful not to engage into hybrid policies that amount to little more than offering the insurance company the unilateral right to profit if/when interest rates rise, when the reality is that simply following a “buy LTC insurance and invest the rest” philosophy would lead to a far better outcome in the long run.


The “Risk” Of Hybrid LTC Policies

The conceptual framing for hybrid policies is fantastic – to aggregate together offsetting risks (dying sooner reduces likelihood of big long-term care claims, living longer pushes out how soon life insurance claims are paid), and perhaps gain a little more scale for policy administration as well. However, it’s hard to be excited about the actual product selection that’s out there, and the way they’re typically constructed at this point.

The primary issue, as I’ve discussed previously on this blog, is that those buying hybrid life/LTC or annuity/LTC policies are at risk to losing out on significant long-term returns, because if/when rates ultimately rise, there’s no guarantee that hybrid policies will pay competitive fixed income rates of return. In other words, if a client puts $200,000 into a hybrid LTC policy, and interest rates rise to 5%, the hybrid policy might only pay out 3%, and the client “loses” $4,000/year of return as an indirect “cost” of holding the policy. In fact, the whole reason hybrid LTC policies can guarantee the LTC insurance costs is BECAUSE they are NOT guaranteeing to pay fair market returns when rates rise! Of course the company can guarantee that the LTC costs in your hybrid policy won’t be increased by $4,000/year (or at all), when the company can simply under-pay on the return by $4,000/year to get the same result with impunity, because they control the money!

https://www.kitces.com/blog/is-the-l...just-a-mirage/
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Old 10-15-2017, 07:29 AM
 
216 posts, read 114,196 times
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That article you continue to post is commenting on the non guaranteed cash value build up. Again, I will try to explain, the LTC benefit premium and benefits are guaranteed and it impossible for them cost more. Your statement that they can become more expensive is flat out not true. Reread your post.
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Old 10-15-2017, 07:48 AM
 
71,511 posts, read 71,674,131 times
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my point is not what you are saying .

as an example , you are losing the return on that money that could be used to buy a regular full feature ltc policy instead of a hybrid with limited benefits .

we could have plunked down a large lump sum of money in a hybrid and got little return and a 1/2 baked ltc plan .

instead we took the same amount , invested it as we do all our money and with just a piece of the higher gains we pay our premium for a partnership plan loaded with perks and far better coverage and still have quite a bit left over .

so great the hybrids don't raise your premium . they don't have to . they keep the gains on your money you should have in your pocket . it is a lot of money to plunk down and quite expensive in opportunity costs , and likely a lot of gains to give up on that money for what you get in such limited benefits.

if and when rates normalize we don't even have to be talking investing in stock . with the historical average at 6% , them giving you only 2% or 3% or even zero if you need the ltc coverage can be very costly in what you are not getting . these lump some hybrids can take a whole load of money to meet both the coverage requirements you need and inflation.

it is like spending 100 bucks to win a 10 buck prize and saying it does not matter because you wanted the prize .

Last edited by mathjak107; 10-15-2017 at 08:12 AM..
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