Long Term Care University – Question of the Month – 02/15/19
By Aaron Skloff, AIF, CFA, MBA
Q: We read the Long Term Care University article 1035 Tax-Free Exchange and are interested in Hybrid Combination Annuity and Long Term Care (LTC) Insurance policies. Can you review the Global Atlantic Forethought ForeCare Hybrid Combination Annuity and LTC policy?
Overview. Forethought Life Insurance Company is part of Global Atlantic Financial Group, an A.M. Best A rated, 15-year-old company. The ForeCare policy is a Hybrid Combination Annuity and Long Term Care Insurance policy. With Hybrid Combination LTC policies the benefits and premiums are guaranteed. The insurance company either: 1) pays you if you need LTC, 2) pays your heirs if you do not need LTC, 3) pays you and your heirs if you need a modest amount of LTC or 4) pays you a refund if you cancel the policy.
Hybrid Combination Annuity and Long Term Care Underwriting. Traditional LTC companies and Hybrid Combination Life and LTC companies conduct extensive underwriting. This often includes ordering and examining all of your medical records from your physicians, specialists, hospitals and outpatient facilities. It may include a paramedical exam to gather: your blood pressure, height and weight, an EKG, urine sample and blood sample. The more information underwriters have, the more likely they will find a reason to deny your application. While Traditional LTC companies approve the lowest percentage of applicants, Hybrid Combination Life and LTC companies approve a higher percentage. Hybrid Combination Annuity and LTC companies approve the highest percentage – approximately 80% to 95%.
Hybrid Combination Annuity and LTC companies do not require medical exams, do not require paramedical exams, and do not order medical records. They primarily rely on a telephone or face-to-face interview to test your cognitive skills. Thus, approvals are determined in 1-5 days.
Global Atlantic Forethought ForeCare is Unique Because It Does Not Have an Elimination Period for Home Care and Offers a Shared Policy. An elimination period is the number of days you pay for your LTC costs out of your own pocket (like a deductible on a homeowners insurance policy). Forecare begins paying for your home care on the first day of care. ForeCare can be purchased as a shared policy.
Global Atlantic Forethought ForeCare Policy Options. The policy options include: Benefit period of 6 years for an individual policy; Benefit periods of 7 and 7.5 years for a shared policy; Nonforfeiture and Inflation protection of none or 5%.
How Global Atlantic Forethought ForeCare Compares with Other Hybrid Combination Annuity and LTC Policies. Let’s look at a husband and wife, Bill and Sue, who are each 65 years old and reside in Georgia. They each pay a $100,000 one-time premium (or $200,000 combined with Global Atlantic or State Life) and are expected to need LTC in 15 years at the age of 80. They are comparing Hybrid Combination Annuity and LTC policies that offer the largest LTC benefits, with at least six years of LTC benefits.
Global Atlantic Forethought ForeCare Outperforms Competitors – with the Highest Monthly Benefit Shared Policy. Bill and Sue will each have $4,230 or $6,764 shared monthly and $304,571 or $608,793 shared total LTC benefits. Guaranty Income Life AnnuiCare is notable for its non-guaranteed high daily LTC benefit. Lincoln LTC Fixed Annuity is notable for its high monthly LTC benefit on a guaranteed basis. OneAmerica State Life Annuity Care II is a strong alternative due to its highest monthly and total LTC benefits on a non-guaranteed and guaranteed basis.
Action Steps and Conclusions. Global Atlantic Forethought ForeCare provides a 0 day elimination period for home care and the highest monthly LTC benefit for shared policies. Since premiums vary greatly based on age, health and marital status, request individualized quotes.
Aaron Skloff, Accredited Investment Fiduciary (AIF), Chartered Financial Analyst (CFA) charter holder, Master of Business Administration (MBA), is the Chief Executive Officer of Skloff Financial Group, a Registered Investment Advisory firm. The firm specializes in financial planning and investment management services for high net worth individuals and benefits for small to middle sized companies. He can be contacted at www.skloff.com or 908-464-3060.