who moved my [ltci] cheese? - financial planning...

Who Moved My [LTCI] Cheese?

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Agenda

Review of public funding of LTC

Changes in LTCI product/pricing

Newer LTC planning solutions to consider

Brief case study examples

Conclusion

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Who Moved my [LTCI] Cheese? The Current Public Funding Environment

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Key Point: Despite changes

in public and private funding

of LTC costs, what has NOT

changed?

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THE NEED!!!

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Medicare

Improvement trigger change

Observation Status challenge

V.A. Benefits

New asset/income guidelines/3 year lookback

Medicaid

Move to privatization/managed care

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Who Moved my [LTCI] Cheese? Recent Changes in LTCI Pricing & Product

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Rate changes

New products & Existing policies - Why?

10 year Treasury in 2000 vs. today

Persistency rates = higher claims

Underwriting changes

Lowered issue ages; conditions insurable vs. not

Policy design changes

Decreased max limits

Shift to HHC driven designs vs. NH

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Who Moved my [LTCI] Cheese? Is it all bad news?

Is it “permanent?”

Don’t believe the hype!

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Traditional LTCI production is down industry-wide

Life policies with LTC/Chronic Riders are Up

Single premium & ongoing premium

Does that mean all clients should have Life policy with rider?

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Who Moved my [LTCI] Cheese? New Planning Solutions for the “New Normal”

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What have clients and prospects moved away from

LTCI?

Premium concerns

“what if I never use it” concerns

So…how do we satisfy those concerns?

Recent SOA Pricing Study

https://www.soa.org/Files/Sections/ltc-pricing-project.pdf

10%...and 10%






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Policy designs to consider

LTCI vs. Life policy w/a rider – which is “best?”

Use of ROP on LTCI?

Other underused(?) design features

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Who Moved my [LTCI] Cheese? Let’s look at some sample cases

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Case Study – LTCI vs. Life

55 year old male

Nontobacco user, preferred (life); standard (LTCI)

$6,000 per month; $300,000 lifetime LTC/Chronic benefit

100% HHC benefit

Non-inflated benefit

Level death benefit on life; no inflation on LTCI

This is important, as that’s not always the comparison

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And we added one additional feature…

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And we added one additional feature…

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Who Moved my [LTCI] Cheese?

So which one is “best?”

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Who Moved my [LTCI] Cheese?

So which one is “best?”

It depends!

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Life w/Rider may be best client

solution for:

Maximization of death benefit

Guarantee of future premiums

Ability to plan for multiple events

Those who may want to have third

party ownership of policy

LTCI w/ROP rider may be

best client solution for:

Most cost effective LTC benefit per

premium dollar

Those less/not concerned with

premium return at death can exclude

rider

Those more comfortable with

current LTCI premium levels

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Clarifying questions for direction

What is the main driver of the conversation?

Is it life insurance planning, or LTC planning?

Have you applied for LTCI in the past?

If so, did you decide against it? (or they decide against you?)

How worried are you about a potential rate increase on your

LTCI policy?

How important are the tax benefits of LTCI to you?

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Underused/Unknown LTCI Plan Design Ideas

& Why

Bigger up front benefit, no inflation

Capped inflation

Buy up, buy down inflation

Capped ROP

Shared Care

Any and all can help with premium affordability

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“Standard” 3% Inflation

3% 20 yr. “Capped” Inflation – Higher Pool

No Inflation But Higher Initial Pool

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Other LTCI Design Possibilities

“Buy-Up, Buy-Down” Inflation

Can go up – OR down – later

No evidence of insurability; attained age driven

Shared Care

Extra pool while living OR Extra pool at death

Family mortality trends?

ROP = 3 X base monthly benefit

Maybe client is a “little” concerned, or wants “some” back?

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No ROP ROP Less Claims ROP 3 X MMB

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Conclusion Questions?

who moved my [ltci] cheese? - financial planning...

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