re: Long term care insurnace policies

I bought a Lincoln Moneyguard policy when I was in my early 30s. I'm 50 now. It was a one-time $25K premium. At this time, the death benefit is $90K and total LTC benefits are $570K.

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Prefer a GVUL chassis over a WL w/ a chronic care rider but either is better than a traditional LTC policy.

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Couldn’t disagree more (with the traditional LTC policy dig). If you’re worried about LTC, traditional LTC policies are the best bang for your buck as far as premium to LTC coverage is concerned.


Granted, I get the idea of concerns about use it or lose it, but if you’re strictly judging by actuarial costs, traditional LTC is the way to go. There is a reason there are very few traditional LTC policies still available outside of age worth. Companies have gotten out because of the tail risk.

Does GVUL premium not start off MUCH higher than a traditional LTC premium? Sure, maybe with age the traditional premium increases above the GVUL cost but I'm assuming you are front loading GVUL much MUCH more?

ETA: If you can afford to max out your retirement at $50k+ a year, I don't see how these are good policies to then put your money into outside of simple comfort and additional investment? In other words, you'll already most likely have plenty of money to pay for this to where it shouldn't be a major concern.

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It’s about leverage and having access to a pile of money before I can accumulate that amount of money.

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Ah yes, leverage. The ole I can loan money from myself arguments?

How do you have access to a pile of money before its grown to become a pile of money?

FWIW I'm not against any of these, I just have yet to see one argument where it makes any sort of sense to not self insure. Statistically speaking your chances of a stay in LTC if you are married and/ or have children for over a year is very low. As in, likely not to be expensive.

No dude I’m not talking about cash value loans.. let’s say I have a $500k G-VUL policy with a chronic care rider and my premium is $12k per year.

Say on year 5, I’ve put $60k into the policy in premiums and now I go on claim. I can now access up to 4% of the death benefit of $500k (so $20k/mo) for LTC purposes. That’s a lot to access even in today’s terms but that would last 2.5 years before the policy exhausts itself.

But say I pass away on year 3 having drawn out only 2%/mo or $10k/mo for a total of $300k (this is more realistic terms). There’s still a $200k life insurance death benefit left over.. and I only put $60k into the policy. Again there’s are hypotheticals but you can see how the insurance works.

Edit: on top of that, a lot of these policies, Prudential specifically has their chronic rider as an indemnity rider. Meaning if I go on claim then I can use that money for whatever I want, it doesn’t have to “reimburse” the healthcare provider.

The rider is added to the policy. You are paying for the rider so no it’s not a loan. You cannot retroactively add this rider to an already inforce policy.

You’re probably accurate assuming age and for a couple’s premium, yet you’re still looking at 15-20 years of premiums to break even assuming 6% growth to eclipse the death benefit and given it’s a VUL chassis, once the cash value exceeds the DB then both will continue to grow above what was originally assumed.

Likely correct for a couples policy yet they would each have their own policy with their own death benefit. I’ll add that these goals and cost (for our sake) are run through moneyguide to assume probability and assumption of risk to insure it makes sense.

You’re accessing the death benefit, not the cash value for LTC purposes, that’s why it’s considered leverage. If you go off claim you stop drawing from it, there’s nothing owed back you just have a lesser policy now.

But you still have to pay your premiums to get that death benefit…which, could be $20k a year.

Idk. These conversations are always somewhat ridiculous because the actual premiums are rarely discussed and for most people these VUL and WL premiums are extremely high.

To the point of if you can afford $15k in premiums PER SPOUSE per year, I still don’t see how $200k potential impact has any impact on your financial plans.

ETA: the selling point would be the possible ‘investment’ but the insurance company has to make money so the vast majority of the owners of these policy are not making money. My guess is well under 7% make money

That sums up my mentality.

I look at insurance for things that are catastrophic. Things that would break me.

If I'm already broken and near death? I don't know.

Insurance companies are not in the business to screw up actuarials. They aren't in the business to go out of business. If they can adjust future payments, odds are that I am not winning in the situation.