He described a policy that is as others here have done, i.e., whole life with a rider. The one he described is a $100K face value second-to-die policy. We have no need of the death benefit. What we get, though, is an unlimited continuation of benefits once we exhaust the face value. The elimination period is 30 days for home care and 60 days for residential care. Longer elimination periods are an option.
His suggestion is to consider paying the life portion as a single premium, with a guaranteed surrender value being essentially the amount of the premium. The continuation of benefit rider can then be paid as 10 or 20 years fixed, or as a continuing premium. Unlike standard LTC policies where the premium can rise on the entire class, the life+rider premium is guaranteed never to go up.
$4000 monthly benefit, 2% annual adjustment, no overall limit
Initial LTC depletes face value benefit. Once exhausted, the lifetime unlimited continuation of benefits rider kicks in. If the first-to-die exhausts the death benefit and gets LTC benefits, the survivor still benefits from the rider. (At least, that's my understanding.) In the unlikely event that the face value weren't exhausted, the remainder would be paid to beneficiaries on death of the second covered party.
Code: Select all
Model Base COB rider total single $50,788 $55,978 $106,766 10 pay $6,240 $6,386 $12,626 20 pay $3,818 $3,765 $7,583 monthly $3,109 $3,086 $6,195 Extended Totals yrs Base COB rider total 1 $50,788 $55,978 $106,766 10 $62,400 $63,860 $126,260 20 $76,360 $75,300 $151,660 30 $93,270 $92,580 $185,850
I haven't plugged any numbers into my financial plan to compare to my current plan of reserving 100's of $K at end of life. A subjective benefit is the value of avoiding financial catastrophe.
Other than a purely financial analysis, what are the gotchas? The financial viability of the company must be evaluated, of course. What questions should I ask the agent or try to find in a policy?
Thanks in advance.
Edit: I'm reserving about $300 K for each of us at end of life (100 year plan) which is a huge chunk of money. The single premium death benefit + 10 pay continuation rider would be a total of $115 K, which is far less. The policy premium being front-loaded has a bearing on that valuation, of course.