For advisors, there's a lot to like about two of the leading "Asset-based" Linked Life/LTC plans - Lincoln Financial MoneyGuard Fixed Advantage and Nationwide CareMatters. But which is the best plan for your client?
As a quick refresher, linked life/ltc plans combine life insurance with tax-qualified long-term care insurance. If a policyholder needs long-term care, it is paid by first accessing an accelerated death benefit and then an extension of benefit rider.
Both plans offer features such as:
- Return of premium
- Guaranteed premiums and benefits
- Tax-qualified (non-taxable) LTC benefits
- Inflation options
We took a look at both products for a 65 year old single female in Illinois - using both a single premium and a 10-pay plan. We did not include inflation options. Take a look at this comparison:
|
|
Lincoln MoneyGuard Fixed Advantage |
Nationwide CareMatters II |
|
$100,000 single premium, 65 year old single female |
|
|
|
Monthly benefit |
$4,091 |
$4,816 |
|
Total benefit pool |
$294,540 |
$346,756 |
|
Death benefit |
$123,223 |
$115,585 |
|
Residual death benefit |
$4,909 |
$23,117 |
|
Type of LTC benefit |
Reimbursement |
Cash Indemnity |
|
$10,000 annual premium, 10 premium payments, 65 year old single female |
|
|
|
Monthly benefit |
$3,368 |
$4,112 |
|
Total benefit pool |
$242,508 |
$296,059 |
|
Death benefit |
$80,836 |
$98,686 |
|
Residual death benefit |
$4,041 |
$19,737 |
|
Type of LTC benefit |
Reimbursement |
Cash Indemnity |
Note: For producer use only - not for consumers
You'll note that the single premium will give you more benefit with both carriers than paying premiums over 10 years. The reason? Because the 10-pay puts more risk on the insurance carrier in earlier years while single premium plans use the deposit to pay for long-term care costs before the carrier pays - a form of partial self-insurance.
So, which plan would you choose? Here are some things to keep in mind. First, a major difference between these plans is the reimbursement versus cash benefits. A cash indemnity benefit will pay a benefit no matter who is providing the care - even if it is an immediate family member. As long as care is required because of failing 2 of 6 activities of daily living (ADL's) or cognitive impairment, the full cash monthly payment is paid. As an example, in the future you could use the money to lease a caregiving robot. Nationwide offers this cash benefit.
On the other hand, if you live in an urban area a reimbursement plan gives you more benefit dollars to use. There are a lot of quality home health care and assisted living communities in major urban areas - and the reimbursement plans should work well.
Either product makes for a sound long-term care plan. For more information on Linked Benefit products, download a special guide or request an illustration.
Pat and Tom Talk Linked Benefits (2 minutes)