The Advisor's View of Long-Term Care Planning

MoneyGuard vs. CareMatters - Linked Life/LTC comparison

Posted by Patrick Bradley | Feb 11, 2016 2:44:05 PM

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For advisors, there's a lot to like about two of the leading "Asset-based" Linked Life/LTC plans - Lincoln Financial MoneyGuard II and Nationwide Care Matters.  But which is the best plan for your client?

As a quick refresher, linked life/ltc plans combine life insurance with tax-qualified long-term care insurance.  If a policyholder needs long-term care, it is paid by first accessing an accelerated death benefit and then an extension of benefit rider.

Both plans offer features such as:

  • Return of premium
  • Guaranteed premiums and benefits
  • Tax-qualified (non-taxable) LTC benefits
  • Inflation options

We took a look at both products for a 65 year old female in Illinois - using both a single premium and a 10-pay plan.  We did not include inflation options.  Take a look at this comparison:

 

Lincoln MoneyGuard II (includes 100% ROP)

Nationwide Care Matters

$100,000 single premium, 65 year old female

 

 

Monthly benefit

$5,280

$5,022

Total benefit pool

$380,157

$361,600

Death benefit

$126,719

$120, 533

Residual death benefit

$6,335

$24,107

 Type of LTC benefit

Reimbursement

Cash Indemnity

     

$10,000 annual premium, 10 premium payments, 65 year old female

 

 

Monthly benefit

$4,545

$3,786

Total benefit pool

$327,228

$272,596

Death benefit

$109,076

$90,865

Residual death benefit

$5,453

$18,173

Type of LTC benefit

Reimbursement

Cash Indemnity

Note:  For producer use only - not for consumers

You'll note that the single premium will give you more benefit with both carriers than paying premiums over 10 years. The reason?  Because the 10-pay puts more risk on the insurance carrier in earlier years while single premium plans use the deposit to pay for long-term care costs before the carrier pays - a form of partial self-insurance.  

So, which plan would you choose? Here are some things to keep in mind.  First, a major difference between these plans is the reimbursement versus cash benefits.  A cash indemnity benefit will pay a benefit no matter who is providing the care - even if it is an immediate family member.  As long as care is required because of failing 2 of 6 activities of daily living (ADL's) or cognitive impairment, the full cash monthly payment is paid.  As an example, in the future you could use the money to lease a caregiving robot. Nationwide offers this cash benefit.

On the other hand, if you live in an urban area a reimbursement plan gives you more benefit dollars to use.  There are a lot of quality home health care and assisted living communities in major urban areas - and the reimbursement plans should work well.

Either product makes for a sound long-term care plan. For more information on Linked Benefit products, download a special guide or request as illustration by visiting this page.

 


 

Pat and Tom Talk Linked Benefits (2 minutes)





Topics: For financial professionals, Advice articles about planning, Lincoln Financial, Nationwide, Linked Benefits

Written by Patrick Bradley

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