Popular LTCi Products - Part 3
You can access all of the LTC planning tools shown in this article with a 30-day free trial to the Buddy System. Sign up here: https://app.buddyins.com/signup
"Information is liberating." - Kofi Annan
Welcome to another special edition of LTC Insurance Community News. This is part 3 in a multi-part series where we will be covering popular types of LTC insurance solutions including:
Part 3: Group Life with LTCi
Part 4: Short Term Care Insurance
Part 5: Annuity Hybrid with LTCi Extension
Part 6: Life Hybrid with LTCi Acceleration
LTCi solutions today have evolved to meet ever changing client and carrier needs.
Part 3: Group Life with LTCi
Easier underwriting and good pricing, but plans with more limited benefits.
These products are very quickly growing in popularity with new products being released every few months.
Carrier specific product details can be found in the Buddy System at https://app.buddyins.com/group-worksite
Group Life with LTCi
Guaranteed issue group products offered through employers, PEOs, associations, and other affinity groups have exploded in popularity since Washington state implemented an LTC payroll tax with private insurance opt out in 2021. Carriers realized the significant consumer and broker demand for these products and the quick and easy solution that was desirable to the mass market.
The sizzle with these products is that most allow guaranteed issue with no health underwriting during a special enrollment period. This is generally at least the first time an actively-at-work employee has an opportunity to purchase the benefit. Simplified issue with a few broad health questions is offered for entrants outside this window. The plans are fully portable and operate like individual policies that can be kept by employees when they change jobs or retire. The plans have level issue age premium rates and guaranteed benefits with contract language that varies from product-to-product.
From a design perspective, Group Life with LTCi generally looks like a mini version of the hybrid life with LTC extension rider concept. The products offer an acceleration of the death benefit. Once the death benefit is exhausted, several solutions offer an LTCi extension rider that doubles or triples the duration of the initial LTC benefit pool. Monthly benefits are available from $1,000 per month up to $20,000 per month. Many of the products offer riders that restore all or a portion of the original life death benefit that is paid out in addition to the LTC benefit amount.
While the talk is about rumors of other states launching their own payroll taxes, the action is with employers looking for new solutions to attract and retain employees or members:
Large employers and associations are able to provide a better actively-at-work employee experience where everyone has access to some level of coverage regardless of health during the special enrollment period.
Employer funding strategies have regained popularity as a low-cost way for small to medium sized employers to meet participation requirements and provide valuable employee engagement and education.
Executive benefits strategies have re-emerged because guaranteed issue policies offer surprisingly robust benefits and good value on the higher end without the fear of being declined based on health. Busy executives have an easy opportunity to obtain a starter level of LTC coverage that they can build upon later.
Unisex pricing has re-emerged where females may have relatively better value from group products than in the individual marketplace.
Even if you don't offer solutions to groups, don't sleep on learning these products as it's likely your friends, family, and clients will be offered these products in the near future. Your clients can buy a group LTCi product and supplement that plan with individual supplemental coverage, just like we see with group life insurance and group disability income solutions.
Even individual carriers are getting into the act, by beginning to offer individually filed products to small groups with simplified issue underwriting based on a census review.
📖 Case Story: Sharada is a 45-year-old female entrepreneur in good health. She owns several successful businesses generating cash flow allowing her financial freedom. Unfortunately, her mother has been progressively deteriorating with Alzheimer's disease. As the closest to her mom of her two siblings, she felt the responsibility to provide the care for her mother. After many years struggling to provide care, run her businesses, and keep her marriage intact, she finally made the tough decision to move her mom into a high end assisted-living facility that specializes in cognitive care. Her mother's lifestyle has dramatically improved, and Sharada has her life back again. She did end up getting divorced, and with no kids, she is concerned about her own care in the future. Sharada's experience with her mother has given her a strong motivation to explore her own LTC plan and insurance policy. Soon, she learned other female executives that are important contributors to her businesses shared a similar experience. Could she offer an affordable plan for herself and her executive team?
🤔 LTCi Solution:
Sharada chose Group Life with LTCi.
She decided to spend $3,000 per month in total provide her 15 top executives meaningful LTCi coverage of $6,000 per month for 50 months of benefits for $300,000 total LTCi benefits. If they don't use the LTC, they have $150,000 of life insurance.
In addition, she offered voluntary Group Life with LTCi to all of her 150 employees to purchase up to $600,000 of LTCi with simplified issue underwriting. If they don't quality, they would automatically get rolled back to $300,000 of coverage.
Employees can choose to meet 1:1 with an LTCi specialist for education, benefit recommendations or to shop the individual market for even more comprehensive coverage.
🤑 Value Proposition: Sample Group Life and LTCi
Group Life with LTCi Breakdown
🍭 Sweet Spots:
Actively-at-work clients ages 18 - 70
No health underwriting
Full portability at issue age premium
Guaranteed life premiums and death benefits
Restoration of the death benefit rider creating a residual death benefit in addition to the LTCi
Indemnity LTC benefits
Simplified underwriting buy-up options
Affordable starter premiums up to mid-range LTC benefits
Better value for female clients with unisex pricing
Education endorsed by trusted employer, association, or affinity group
E-commerce self-service application buying experience
⚠️ Cautionary Area:
Products are more complex than they appear with a variety of different plan designs including universal life, whole life, and group term life designs with LTCi or chronic illness.
Generally, no inflation protection to grow benefits
Product benefit guarantees may be complex or reduce at older ages
Newer voluntary benefit carriers with less LTC experience may have service issues especially during high volume periods and new product and state launches
Clients may have less time to learn about LTC planning and the nuanced product features during a shorter enrollment window.
Partner with an LTCi enrollment specialist like BuddyIns where you can leverage proven marketing, education, and enrollment technology.
🧪 Sample Products:
Chubb (Term-to-Age 121)
Trustmark (UL or Term-To-Age 121)
Transamerica (UL or WL)
Allstate Benefits (UL or WL)
John Hancock (IUL or UL)
Equitable (Term-to-Age 121)
MetLife (UL or WL)
Voya (Term-to-Age 121)
⏭️ Up Next: Part 4: Short Term Care Insurance
You can access all of the LTC planning tools shown in this article with a 30-day free trial to the Buddy System. Sign up here to design your own plans or review the products in detail: https://app.buddyins.com/signup