Archive for May, 2014

Combination (Hybrid) Life-Long Term Care Insurance

May 27, 2014

Not to be confused with primarily life insurance with a small long term care benefit tacked on. Hybrids provide a leveraged long term care benefit with a small life insurance component. More than one insurance company offers this innovative policy. When appropriate to their individual situations, I had already been offering Pacific Care by Pacific Life Insurance Company. At last month’s Kansas City long term care conference, I became comfortable* with two additional hybrid policies.

Money Guard by Lincoln National Life Insurance Co. and Total Living Coverage by Genworth Life Insurance Co.

All three are good policies from good insurance companies. All have their strengths and (a few) weaknesses. What is best for any particular person depends upon planning objectives (i.e. what problem are we trying to solve?), marital status, gender, how quickly a premium refund may be needed, and medical history (underwriting) concerns.

The upside is there are no more premium payments after the first one, plus a guarantee that you (or your beneficiaries) can get at least all of your premium dollars back. The downside is there are no more premium payments after the first one, thus necessitating a large single premium.

*So how did I become comfortable with the two additional hybrid policies? It was not easy. I listened to what company representatives had to say, studied policy illustrations and sample policies, argued with an actuary from one of the companies, discussed concepts and details with fellow conference attendees, and went over everything again in my hotel room at night.

Call me for more about these versatile policies. They could be a good fit for some, but not most situations.

Disclaimer: Actual policy language, rather than the contents of this eNewsletter always takes precedence. Long term care insurance policies vary widely from company to company & often within the same company. Raymond Smith, The Long Term Care Specialist, does not give legal or tax advice. Consult your tax advisor or attorney for these matters.

© Raymond Smith, The Long Term Care Specialist, 2014

Am I Covered If I Relocate To…

May 16, 2014

All of the long term care insurance companies I work with (currently Genworth, John Hancock, Life Secure, Mass Mutual, MedAmerica, Mutual of Omaha and Transamerica) pay benefits in all 50 US states plus the District of Columbia. But what if you need long term care services while in another country? Note: The following discussion applies to policies that can be applied for today. Older in-force policies may have different provisions. Call me if you have a question about a specific policy.

Genworth: Full policy benefits for all 50 states and the District of Columbia. Benefit for nursing facility care is limited to 50% of the nursing facility daily or monthly maximum. The Home care benefit is limited to 25% of the policy daily or monthly nursing home benefit, and for a maximum of 365 days. “No payment will be made under this benefit (international benefit) for covered expenses incurred more than 4 years after the date the first covered expense payable under this benefit was incurred.”

John Hancock: Full policy benefits for all 50 states and the District of Columbia. This benefit provides coverage anywhere outside of the United States in an amount equal to 365 times the maximum daily benefit or 12 times the monthly benefit. Waiver of Home Care Elimination Period and some other ancillary benefits are not covered outside the US.

Life Secure: Full policy benefits in all 50 states, the District of Columbia, US territories and possessions, Canada, and Canadian possessions and territories. The international coverage benefit is paid on a cash basis regardless of actual expenses as follows: 1) 100% of the maximum monthly benefit for care provided in assisted living or a nursing home. 2) 50% of the maximum monthly benefit for care provided in a home or a community based setting. Non-Canadian international benefits are limited to a lifetime 365 days.

Mass Mutual: Full policy benefits for all 50 states, District of Columbia, US territories and Canada. For other world-wide care locations: 1) 25% of the total benefit pool is available, although reimbursement remains capped at the basic policy daily or monthly maximum. 2) For other than the US (including US territories) and Canada, there is an additional “overseas” elimination period equal to the policy facility care elimination period. Example: If your policy has a 90 day elimination period for assisted living and nursing home care, and a zero day for home care, there will be an additional 90 day elimination period that applies only to care received overseas.

MedAmerica: “…covers qualified long-term care services provided to you anywhere in the world by licensed healthcare practitioners certified by applicable governmental bodies where required.” If the Monthly Cash Benefit Rider is purchased, the policy will pay 100% of the maximum monthly benefit amount world-wide, for: assisted living, home care, and adult day care. Nursing home care is also paid world-wide, but on a reimbursement basis.

Mutual of Omaha: Full policy benefits for all 50 states, the District of Columbia, US territories, Canada, or the United Kingdom. The other-country international lifetime benefit is limited to twelve times the maximum monthly benefit. The maximum monthly benefit is paid regardless of the amount of incurred expenses in any given month.

Transamerica: TransCare III policy. Covers care provided in the 50 states, the District of Columbia, and Canada only. Other than care provided in Canada, there is no international benefit. Note: It is possible, but unlikely, that a cash benefit (one-third of the monthly benefit) could be paid outside of the US and Canada. I would not count on it.

Most insurance companies will pay full benefits for long term care services provided in the US or Canada (Genworth and John Hancock do not provide full benefits for Canada.). If are thinking about moving to the United Kingdom , MedAmerica and Mutual of Omaha are your only two choices. MedAmerica is your only choice if you are going to live anywhere in the world other than the US, Canada or the United Kingdom. Most companies (with the exception of Transamerica) provide at least limited benefits world wide…the intent is to provide temporary coverage until you can return to the US. A few final words of caution: Insurance companies will generally not pay for care received in countries that have been declared “off limits” to Americans by the US Department of State.

Disclaimer: Actual policy language, rather than the contents of this eNewsletter always takes precedence. Long term care insurance policies vary widely from company to company & within the same company. Raymond Smith, The Long Term Care Specialist, does not give legal or tax advice. Consult your tax advisor or attorney for these matters.

© Raymond Smith, The Long Term Care Specialist, 2014

What Happens When You Call Me?

May 11, 2014

Almost all of my new clients are referred to me by someone else. Financial planners, wealth managers, lawyers, CPAs and insurance agents like how I work, and thus feel good about referring their clients to me. My current clients often recommend me to their friends and business associates as well. People also find me online through my website or articles I have written.

Either I have been given your name and phone number and asked to call you, or you call me. During that phone conversation, I try to determine three things: 1) Do you qualify medically for long term care insurance? 2) Given your individual situation, does long term care insurance make financial sense for you and your family? 3) Are there any available discounts or tax breaks that you can take advantage of? Experience has taught me that skipping the pre-qualification step often leads to my communicating the value of long term care insurance only to later be forced to say, “but you can’t have it”.

If your medical history is complex or perhaps borderline (from a risk management viewpoint), I then call a number of insurance company underwriters directly and ask the following question: “If I were to submit an application for someone with this history, what would be your likely underwriting decision?”. I am looking for reasonable assurance that the particular insurance company would accept your application as well as what your rate class would likely be. By the way, I never give your name. Sometimes medical history is such that I can easily use my experience (and shelf full of carrier underwriting guides) to know what the underwriting decision will be.

We have now successfully navigated the initial screening process.
Using a software subscription service that covers every company offering long term care insurance, I now start creating a number of tentative policy designs. Obviously not making the first cut are the insurance companies (if any) that earlier told me they would not approve your application. More an art than a science, I then select the two or three best value policies and include them in a spreadsheet showing benefits and premiums. This spreadsheet is what I bring to our first appointment. I use the spreadsheet to show you how long term care insurance works. At this point, I do not yet know if long term care insurance is the best answer to your long term care services funding problem.

The first appointment is a time for education…in both directions. For me, to learn more about who you are and what is important to you. For you, to learn about different available policy benefits and how these benefits impact policy cost. It is also a time for you to decide if you would be comfortable working with me. This meeting is a dialogue. Questions are encouraged. My goal for this first meeting is leave you with enough information to make an informed decision as to what will be best for you and your family. If long term care insurance at least seems to make sense for you, we now schedule our second appointment.

Second appointment: This is when we raise and answer additional questions, make policy design adjustments, and, if appropriate, complete the insurance application.

The actual insurance company underwriting process: This usually takes about 45-60 days. I monitor every case, every business day until I have the issued policy in my hands. You may get a little nudge from me if, for example, an insurance company telephone interviewer has unsuccessfully been trying to reach you. Waiting for medical records takes the major portion of the insurance company processing time…I often call doctor’s offices in an attempt to get the records moving. The underwriting decision is made, I notify you of the good news, and your policy arrives at my mailbox about 7-10 days later.

Personal delivery of your policy: Unless you are in another state (other than Colorado), I personally deliver every policy. This is because with a 45-60 day lag time, you may not remember all that your long term care insurance policy covers. I want to go over your policy with you, answer any questions, and make sure you know to contact me if you later need to request policy benefits.

Staying in touch: Unless you were referred to me by someone who wants to do this himself or herself, you will get greeting cards from me several times each year. As I sign each one (which I always do), I think about the person who entrusted me with an important part of his or her family’s well-being. The staying in touch does not end here. You can call or email me at any time and I will do my best to get back to you within 24 business hours…sooner if possible. I may call you just to see how things are going.

This is how I work. I thought you should know.

Disclaimer: This eNewsletter and all links to other sources should not be construed as tax or legal advice because they are neither. Raymond Smith, The Long Term Care Specialist, does not give legal or tax advice. Consult your attorney or tax advisor for these matters.

© Raymond Smith, The Long Term Care Specialist, 2014