mathjak107
Well-known Member
- Location
- bayside ,queens , ny
one option are those cross linked life insurance policy's but while better than no insurance they end up being very costly and have very limited coverage .
they basically force you to plunk down a big pile of cash in exchange for a death benefit of 2x what you give them and the ability to draw even a bit more if long term care is needed .
you get little interest if the policy is held to death and any long term care payments are subtracted out .
it may be like trying to be a little bit pregnant , it may be so far from being able to support a home down the road that it does no good regardless .
as michael kitces pointed out :
The primary issue, as I’ve discussed previously on this blog, is that those buying hybrid life/LTC or annuity/LTC policies are at risk to losing out on significant long-term returns, because if/when rates ultimately rise, there’s no guarantee that hybrid policies will pay competitive fixed income rates of return. In other words, if a client puts $200,000 into a hybrid LTC policy, and interest rates rise to 5%, the hybrid policy might only pay out 3%, and the client “loses” $4,000/year of return as an indirect “cost” of holding the policy. In fact, the whole reason hybrid LTC policies can guarantee the LTC insurance costs is BECAUSE they are NOT guaranteeing to pay fair market returns when rates rise! Of course the company can guarantee that the LTC costs in your hybrid policy won’t be increased by $4,000/year (or at all), when the company can simply under-pay on the return by $4,000/year to get the same result with impunity, becausethey control the money!
they basically force you to plunk down a big pile of cash in exchange for a death benefit of 2x what you give them and the ability to draw even a bit more if long term care is needed .
you get little interest if the policy is held to death and any long term care payments are subtracted out .
it may be like trying to be a little bit pregnant , it may be so far from being able to support a home down the road that it does no good regardless .
as michael kitces pointed out :
The primary issue, as I’ve discussed previously on this blog, is that those buying hybrid life/LTC or annuity/LTC policies are at risk to losing out on significant long-term returns, because if/when rates ultimately rise, there’s no guarantee that hybrid policies will pay competitive fixed income rates of return. In other words, if a client puts $200,000 into a hybrid LTC policy, and interest rates rise to 5%, the hybrid policy might only pay out 3%, and the client “loses” $4,000/year of return as an indirect “cost” of holding the policy. In fact, the whole reason hybrid LTC policies can guarantee the LTC insurance costs is BECAUSE they are NOT guaranteeing to pay fair market returns when rates rise! Of course the company can guarantee that the LTC costs in your hybrid policy won’t be increased by $4,000/year (or at all), when the company can simply under-pay on the return by $4,000/year to get the same result with impunity, becausethey control the money!