Who Moved My [LTCI] Cheese?
Who Moved My [LTCI] Cheese? Agenda Review of public funding of LTC Changes in LTCI product/pricing Newer LTC planning solutions to consider Brief case study examples Conclusion 2
Who Moved my [LTCI] Cheese? The Current Public Funding Environment 3
Key Point: Despite changes in public and private funding of LTC costs, what has NOT changed? 4
THE NEED!!! 5
Who Moved My [LTCI] Cheese? Medicare Improvement trigger change Observation Status challenge V.A. Benefits New asset/income guidelines/3 year lookback Medicaid Move to privatization/managed care 6
Who Moved my [LTCI] Cheese? Recent Changes in LTCI Pricing & Product 7
Who Moved My [LTCI] Cheese? 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 8
Who Moved my [LTCI] Cheese? Is it all bad news? Is it permanent? Don t believe the hype! 9
Who Moved My [LTCI] Cheese? 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? 10
Who Moved my [LTCI] Cheese? New Planning Solutions for the New Normal 11
Who Moved My [LTCI] Cheese? 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% 12
Who Moved My [LTCI] Cheese? Policy designs to consider LTCI vs. Life policy w/a rider which is best? Use of ROP on LTCI? Other underused(?) design features 13
Who Moved my [LTCI] Cheese? Let s look at some sample cases 14
Who Moved My [LTCI] Cheese? 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 15
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And we added one additional feature 17
And we added one additional feature 18
Who Moved my [LTCI] Cheese? So which one is best? 19
Who Moved my [LTCI] Cheese? So which one is best? It depends! 20
Who Moved My [LTCI] Cheese? 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 21
Who Moved My [LTCI] Cheese? 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? 22
Who Moved My [LTCI] Cheese? 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 23
Standard 3% Inflation 3% 20 yr. Capped Inflation Higher Pool No Inflation But Higher Initial Pool 24
Who Moved My [LTCI] Cheese? 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? 25
No ROP ROP Less Claims ROP 3 X MMB 26
Conclusion Questions? 27