Answers to Long Term Care Insurance Q & A

By | December 18, 2020

Hi John, thanks for the questions.  I hear what you described from clients all over the US so that must be ABC Mutual Long Term Care Insurance pitch.  They say they can sell other companies but always push the customer towards ABC MutualLong Term Care Insurance.  The reason is they do have the ability to sell other carriers, but 15 years ago I met with a ABC Mutual Long Term Care Insurance recruiter.  I recall that back then I would have been able to sell other companies too, but the commission was much lower and to get their bonuses you had to produce a certain amount of ABC Mutual Long Term Care Insurance business in order to stay around.  In short, they could sell other companies but few did because they would cut your commissions.

As far as the financial ratings and profitability of ABC Mutual  … they are good, but the shell company which is what you are buying, ABC Mutual Long Term Care Insurance is losing money.  See attached and look at the last line.  They have chosen to firewall their Long Term Care Insurance biz into a separate company and their Long Term Care Insurance company is already losing money.  Admittedly this is conjecture on my part, but it seems like they know they have a lot of toxic business on their books and want to protect the parent company if things continue to go south for their Long Term Care Insurance business.  Whatever the case may be, insurance companies don’t do things like this for nothing.

The second attachment is the dividend payout percentage companywide over the past 15 years and as you can see XYZ Mutual s paying out the highest percentage amongst its peers.  The past few years XYZ Mutual has been paying out about 25% more in dividends than ABC Mutual .  I like looking since 2008 as that was when we had a financial crisis and seeing how a company performs during crisis is important in my opinion.  Here’s more info on dividends: Points:

1) All Long Term Care Insurance policies are tax qualified meaning that if you are in theright tax situation you may be able to deduct the LTC premiums off your adjusted gross. I’d talk to your tax pro to the options.

2) Again, see last line of Long Term Care Insurance shell company and you’ll see they are already losing money.  To me this is odd because they have only been writing Long Term Care Insurance business since 1999 so they should not be having so many claims as their book of business is relatively young vs. say Genworth Long Term Care Insurance which goes back to 1974. The tea leaves tell me their actuaries got it wrong back then and they approved people with one foot in the grave. Again, speculation on my part but I’d love to hear the reason why they fire walled their LTC biz and are already losing money.

3) XYZ Mutual is the same, you are a owner and they HAVE paid dividends. The dividends start in the tenth year with XYZ Mutual Long Term Care Insurance product.

4) XYZ Mutual like ABC Mutual has never raised rates.

5) XYZ Mutual inflation rider is NOT CPI. It’s 3% annual compound.

6) Mutual Long Term Care Insurance elimination period is service. In my 17 years ofhelping clients with claims this has been a non­event because the claims usually start from an accident like broken hip or illness where the people need care everyday anyway, not sporadically.  Sporadic care tends to results months after the broken hip as the person recovers.  You can add the rider where just one day of care a week counts toward seven days off the deductible for about 5% more.  I’d say save your money but either way XYZ Mutual  will still be 33% to 50% less than ABC Mutual.

7) Premiums are waived with XYZ Mutual once they begin paying you. ABC Mutual  doeswave them from day one I guess because they are charging you 33­50% more all those years leading up to you using it.

8) With XYZ Mutual I think it’s just 60 days times your daily benefit for medicalequipment.

9) I’m not aware of any upgrade with XYZ Mutual. These polices have not had any majorimprovements since 1998 when I got in the business so I think that’s more a sales bullet point.

10) XYZ Mutual Long Term Care Insurance be rolling out a new product with higherpricing soon, but we don’t have the date yet. If you get your app in before the deadline you’ll be grandfathered into this product.

11) Yes, if you took your deductible out to one whole year with ABC Mutual, it then wouldonly be 15% more expensive than XYZ Mutual with a 90 day EP.

12) We did not quote the best XYZ Mutual rate class, rather their second best rate class.

We did quote ABC Mutual best rate class.  There’s a good chance you might not get ABC Mutual best rate class.  The agent is mudding the waters with what the companies call their rate classes.  The best way to do it is know that XYZ Mutual has three rate classes and we quoted you the second best.  ABC Mutual  has three as well ( Standard, rate 1 and rate 2)  You were quoted ABC Mutual best rate class.

A long list John so if I missed something just let me know, or click here for more info