LONG TERM CARE INSURANCE A Registered Investment Advisor Provides an Answer Outline There is no single plan that suits all needs. Choices become a matter of cost, available funds, shared care requirement, age, client expectations and optimal analysis. The final determination becomes a decision tree as to what best fits the needs of each buyer. GENERAL DESCRIPTIONS THE LTC POLICIES CONSIDERED IN THIS ANALYSIS Standard LTC Insurance With Life Pay - Insurance Carrier Providers: a. John Hancock b. Met Life c. GE d. most LTC Insurance providers Inflation Protection 5% Simple, 5% Compounded, 5%-3% (daily, policy limit) Compounded Discount For Spouse/Partner Elimination Period 0 to 270 days (or longer); usual is 90 days. Sponsored Group Discounts Companies can offer Standard LTC Plans to their employees at discounted group rates. Employees or employers can use this discount. Return of Premium Rider Allows the insured to have all premium payments returned if the LTC provisions are not exercised - Return of Premium upon Death. The cost for this rider is high. Indemnity Benefit Rider Provides full daily benefit to be paid even if actual costs are less than the benefit amount. Waiver of Premium Rider After the 90 day elimination period expires, further premiums are waived until such time as the insured is no longer using LTC. 10-Pay Standard LTC Insurance LTC Insurance that provides a predetermined premium payment schedule, versus life pay, which is the industry norm: 10-Pay policies are initially more expensive, but provide lower risk for premium increases. a. John Hancock b. Met Life c. Berkshire Life Insurance Guardian Insurance Berkshire has a plan that is about 30% less expensive than John Hancock and others.
STANDARD POLICY BENEFIT CHOICES: A. Daily or Monthly Benefit Amount: Daily Benefit Options $50 $500 per day (in $10 increments). If your age is 80 84, select $50 $250 (in $10 increments). Monthly Benefit Options $1,500 $15,000 per month (in $100 increments). If your age is 80 84, select $1,500 $7,500 (in $10 increments). B. Benefit Period 2 years, 3 years, 4 years,7 5 years,7 6 years,7 10 years,7 or Lifetime.7 Total Benefit Your Total Pool of Money Available Daily Benefit x Benefit Period = Your Personal Total Pool of Money $150 Per Day x 4 Years (1,460 days) = $219,000 Monthly Benefit Example: Monthly Benefit x Benefit Period = Your Personal Total Pool of Money $4,500 Per Month x 4 Years (48 months) = $216,000 C. Elimination Period 30 days,10 60 days,10 90 days, 180 days, or 365 days. Your deductible need only be satisfied once during the life of your policy. If you receive care at home one or more days per week, seven days in that week will be applied toward satisfying your deductible. Inflation Protection D. Enhanced Guaranteed Purchase Option (GPO): John Hancock s Custom Care II policy provides built-in inflation protection with the Enhanced Guaranteed Purchase Option. The GPO provides you with an offer to increase your Daily or Monthly Benefit and your Total Pool of Money by either 5%, 10%, or 15% of the original amount without evidence of insurability. This option can be exercised every three years. You will also have a one-time option to change your inflation protection to 5% compound at age 65 without any evidence of insurability. 5/5% Simple Inflation:12 Each year, both your Daily or Monthly Benefit and your Total Pool of Money will increase by 5% on a simple basis. 5/3% Compound Inflation:13 Each year, your Daily or Monthly Benefit will increase by 5% and your Total Pool of Money will increase by 3% on a compounded basis. 5/5% Compound Inflation: Each year, your Daily or Monthly Benefit and your Total Pool of Money will increase by 5% on a compounded basis. E. Expanded care choices. Additional Stay at Home Benefit Goes beyond core long term care insurance coverage (which covers you at home or in a Facility), providing extra funds to pay for home modifications, durable medical equipment, caregiver training, home safety checks, provider care checks, and medical alert systems. The amount available for this benefit is equal to the Monthly Benefit selected (or 30 times the Daily Benefit selected) on a lifetime basis. This benefit is not subject to the Elimination Period, and is a separate pool of benefits in addition to your Total Pool of Money. Care Advisory Services Enables you to select an independent professional of your choice to assist you in determining the care and treatment that s right for you.
Respite Care Benefits Provides short-term, temporary relief to enable your primary caregiver, who may be a family member or friend, to take a break. Respite Care will be covered for up to 21 days per calendar year. This benefit, which reduces your policy limit, is payable during your Elimination Period, but does not count toward your Elimination Period. Once you have satisfied your Elimination Period, if you need Respite Care, it will be covered under your long term care insurance benefit. F. BENEFITS SPECIFICALLY DESIGNED FOR PEOPLE UNDER AGE 65.: Double Coverage for Accidents Benefit If you need care as the result of an accidental injury that occurs before age 65, actual long term care expenses will be covered up to two times your current Daily or Monthly benefit for the entire duration of the claim. Benefits paid in excess of the Daily or Monthly Benefit will not be deducted from your policy limit. Return of Premium Your beneficiary will receive a benefit equal to total premiums paid, less any long term care benefits paid, if you die prior to age 65. International Coverage This benefit provides coverage anywhere in the world, for up to one year. Benefits will be based on 100% of your Daily or Monthly Benefit. Waiver of Premium Once you begin receiving benefits, your long term care insurance premiums will be waived. This will continue until benefits are no longer payable or your policy ends. Bed Hold Benefit If you are in a nursing home or assisted living facility, your room will be reserved for you for up to 60 days per calendar year, if you need to leave it temporarily for any reason. Protection Against Lapse of Policy (Contingent Non-forfeiture) If you lapse your policy due to a substantial premium increase, you will have the right to reduce your policy benefits so that your premium payments are not increased, or convert your coverage to paid-up status, under which no further payments are due. Shared Care This feature allows you to use your partner s benefits when yours are exhausted. If one partner dies, the survivor s benefits will increase by the deceased partner s remaining benefit dollars. The survivor s premium will be reduced by the cost of the Shared Care benefit. Also, upon exhaustion of an insured s policy benefits by his/her spouse/partner, the insured has the option to purchase a policy with a twoyear benefit (with no underwriting if no claims in prior two years). Survivorship and Waiver of Premium Benefit When both partners have held a policy for 10 years without using it, and one partner accesses benefits, the other partner s premium is waived. If one partner dies, the surviving partner will not have to pay any future premium. G. OPTIONAL FEATURES TO ENHANCE A POLICY. Couples (Partners/Spouses) include policyholders who: Are married have lived with a family member of the same generation (sibling or cousin) for at least three years have lived with a partner of the same sex or opposite sex for at least three years. Enhanced home care benefits. Waiver of Home Care Elimination Period (Zero-Day Home Care Elimination Period) If you receive home health care, hospice care in your home, or adult day care, your Elimination Period will be waived. Additional Cash Benefit This benefit provides a separate pool of funds that assists you in staying at home. The cash benefit is equal to 15% of your Monthly Benefit or 4.5 times your Daily Benefit and can be used to pay for a variety of long term care expenses while you are receiving home health care. Note: Benefits received may create a taxable event. Please consult your tax adviser.
H. Enhanced value. Enhanced Return of Premium This feature enhances the built-in Return of Premium Benefit, enabling your beneficiary to receive a benefit equal to your total premiums paid, less any long term care benefits paid, regardless of your age at death. Restoration of Benefits Your full policy limit can be restored once if you have been receiving benefits and then recover, and need no care or treatment for 180 days. Non-forfeiture If you stop paying your premium after the third25 year, your past premiums will still be available to pay for services. Discounts Custom Care II also offers discounts that can help make coverage more affordable for individuals, couples, and families. Preferred Health Discount If you are in excellent health when you apply for John Hancock long term care insurance coverage, you may be eligible to receive a 15% premium discount. Couples Discount Your policy premium will be reduced by 15% if you have a partner and by 30% if both you and your partner have applied and are approved for long term care coverage. Family Discount When you and two other family members own separate John Hancock individual long term care insurance policies, you will each receive a 5% discount. Flexible payment options Your premiums can be paid monthly, quarterly, semi-annually, or annually it s up to you. You can even pay your premium monthly or quarterly by credit card if you choose one of these plans. And you may choose one of our Limited Payment Options:29 10-Pay or a Paid-Up at Age 65 Option (available up to age 55). UNIVERSAL LIFE POLICY BENEFIT CHOICES: A. Universal Life with LTC Provisions MoneyGuard Lincoln Life Insurance Life insurance guarantees. a. Money back if you don t need to use your policy when you fund your policy with a single premium payment. b. Long-term care provides income tax-free benefits Income tax-free long-term care benefits Benefits are paid income tax-free under IRC Section 104(a)(3). If you need long-term care and have met eligibility requirements, the specified amount of death benefit is accelerated to pay for covered expenses up to a monthly maximum benefit amount. At issue you can purchase additional coverage to continue your long-term care benefit payments for qualifying services after your initial specified amount of death benefit is exhausted. The Extension of Benefits Rider (EOBR) provides you with benefits for a specified time period. Long-term care coverage will continue as long as you remain eligible or until your entire long-term care benefit is exhausted. c. Lifetime money back guarantee d. Income tax-free death benefit e. Optional inflation protection f. Qualified long-term care benefits include: Home healthcare Assisted living Nursing home Adult daycare Personal care services Hospice services
Alternative care services g. Expenses are reimbursed up to 100% of monthly maximum for all levels of care. h. Convalescent Care Benefits Rider (CCBR) This rider allows us to accelerate the specified amount of death benefit to pay for covered long-term care expenses. Benefits may be paid over 24 or 36 months. i. Extension of Benefits Rider (EOBR) This rider extends benefits after the entire specified amount of death benefit has been used to pay the long-term care expenses. You may choose an additional two or four years of benefit payments. j. Inflation protection Two types of inflation protection available, simple or compound Simple 3% CCBR; 3% EOBR Compound 2% CCBR; 5% EOBR You must have the same type of inflation protection under both coverages, i.e. both simple or both compound. Inflation protection is subject to state availability. Where available, the CCBR, EOBR, and Inflation Protection can be purchased for an additional cost. k. Residual death benefit If your entire specified amount of death benefit has been used to pay for long-term care, MoneyGuard Reserve will pay your beneficiary a residual death benefit. At the time you purchase the policy, the benefit is equal to 10% of the initial death benefit. The residual death benefit will be adjusted by 10% of any loans, loan interest, withdrawals, or loan repayments. l. Coverage MoneyGuard is a universal life insurance policy funded with flexible premium payments. You may make a one-time payment or annual payments over a 3-, 5-, 7-, or 10-year period, at which time the contract becomes paid-up (assuming no loans or withdrawals are taken). m. Issue ages and classes Ages 30 80 (age last birthday) Nonsmoker and smoker n. Minimum specified amount $25,000* o. Maximum specified amount $500,000 with 2 year CCBR $750,000 with 3 year CCBR p. Benefit period options 2 years (2+0) 3 years (3+0) 4 years (2+2) 6 years (2+4) 5 years (3+2) 7 years (3+4) q. Deductible period 90 days r. Guaranteed interest rate - 4% *May vary by state.
UNDERWRITING STANDARDS: A. MoneyGuard Lincoln Life Insurance Single premium only: No medical exams or lab work are required for ages 60 and older; Attending Physician Statement only. A one hour phone conference to fill out a streamlined underwriting personal history interview. Age Single premium cases B. Standard LTC Insurance Policy 1. Do you currently have, or have you ever had a diagnosis for: Alzheimer s Disease, Huntington s Chorea, Multiple Sclerosis, Schizophrenia, Amyotrophic Lateral Sclerosis, Memory Loss, Muscular Dystrophy, Scleroderma, Cystic Fibrosis, Mental Retardation, Myasthenia Gravis, Spinal Cord Injury, Dementia, Multiple Myeloma, Parkinson s Disease, Stroke/CVA... Yes No 2. Do you require human assistance or supervision in any of the following activities: eating, dressing, toileting, transferring from bed to chair, walking, maintaining continence, and bathing?... Yes No 3. Do you currently reside in, have you been advised to enter, or are you planning to enter a nursing home, assisted care living facility or other custodial facility, or are you currently receiving home health care services or attending adult day care?... Yes No 4. Do you currently use one of the following medical devices: wheelchair, walker, hospital bed, quad cane, oxygen, stair lift, and dialysis?... Yes No 5. Have you been diagnosed or treated by a member of the medical profession for AIDS (Acquired Immune Deficiency Syndrome) or AIDS Related Complex?... Yes No 6. Have you consulted with your primary care physician within the past 18 months?.... Yes No 7. Have you used tobacco products (cigarettes, pipe, cigar, or chewing tobacco) in the last 12 months?... Yes No 8. Within the last 10 years, have you received medical advice, diagnosis or treatment, or consulted with a member of the medical profession for any of the following conditions? a. Circulatory Disorders: Transient Ischemic Attack, Amaurosis Fugax, Heart Arrhythmias, Valvular Disease, Cardiomyopathy, Congestive Heart Failure, Aneurysm, Coronary Artery Disease, High Blood Pressure, Peripheral Vascular Disease, Carotid Artery Disease, Embolisms... Yes No b. Endocrine and Pituitary Disorders: Diabetes, Addison s Disease, Pancreatitis, Cushing s Disease.... Yes No c. Cancers: Leukemia, Lymphoma, Tumors, Melanoma, Squamous Cell, Sarcomas... Yes No d. Genitourinary Disorders: Renal Insufficiency, Kidney Failure, Incontinence, Prostate Disorders, Bladder Disorders... Yes No e. Gastrointestinal Disorders: Hepatitis, Ulcerative Colitis, Crohn s Disease, Liver Disorders, Cirrhosis... Yes No f. Neurological Disorders: Cerebral Atrophy, Mental Illness, Depression, Seizures, Tremors, Neuropathy, Syncope, Anxiety, Chronic Fatigue Syndrome... Yes No g. Blood Disorders: Anemia, Polycythemia Vera, Thrombocytopenia, Hemochromatosis.... Yes No h. Musculoskeletal Disorders: Osteoporosis, Arthritis, Rheumatoid Arthritis, Osteoarthritis, Fractures, Fibromyalgia, Degenerative Joint Disease, Scoliosis, Spinal Stenosis, Lupus, Polymyalgia Rheumatica, Osteopenia, Paralysis, Crest... Yes No i. Respiratory Disorders: Emphysema, Bronchitis, Asthma, Bronchiectasis, Asbestosis, Sarcoidosis, Chronic Obstructive Pulmonary Disease... Yes No
j. Eye & Ear Disorders: Macular Degeneration, Glaucoma, Retinitis Pigmentosa, Labrynthitis, Meniere s/vertigo.... Yes No k. Substance Abuse:,Alcoholism, Drug dependency, Illicit drug use...... Yes No 9. Within the last 10 years have you been hospitalized or have you consulted or been treated by a member of the medical profession for any reason not previously stated?...... Yes No 10. Within the last 5 years has any surgery or test(s) been recommended that have not been performed?...... Yes No 11. Have you ever had an application for life, accident, medical or health, disability or long-term care insurance declined, postponed, modified or rated?... Yes No If YES, list medical reason: 12. Are you receiving any disability benefits?... Yes No If YES, list medical reason: Disability % LIFESTYLE If you are age 64 or younger: 1. Are you currently employed? If so, what is your occupation: Yes No 2. In the past 10 years, have you done or do you intend to do any of the following activities: Skin/scuba diving, Parachuting, Motorized racing, Rock/mountain climbing, Boxing? If Yes frequency:.. Yes No 3. In the past 10 years, have you been convicted of two or more felony motor vehicle moving violations or had a driving license suspended or revoked? If Yes, license number and state:.. Yes No H Please check YES or NO beside each numbered question or statement. 1. Are you covered by Medicaid?... Yes No 2. Have you had another long-term care insurance policy or certificate in force during the last 12 months? If YES, please provide details below..... Yes No 3. Do you have another long-term care insurance policy or certificate in force (including a health care service, Health maintenance organization or Medicare Supplement contract)? If YES, please provide details below... Yes No 4. Do you intend to replace any of your long-term care, medical or health insurance coverage with the policy for which you are applying? If YES, please provide details below.... Yes No TAX ISSUES: A. Qualified Standard LTC Plans are tax deductible For C Corporations, LTC Insurance is fully deductible to the Corporation Return of Premium policies will return to the Insured, tax free For Sub S and Limited Liability Corporations, LTC costs are partially deductible B. Universal Life with LTC Extensions is not a tax deductible expense to a corporation, in most cases.