Long Term Care University – Question of the Month – 06/01/22
By Aaron Skloff, AIF, CFA, MBA
Q: We read the Long Term Care University article ‘Traditional Versus Hybrid Life and Long Term Care Insurance’ and prefer the Hybrid Long Term Care Insurance (LTC) policy. Can you please review the Minnesota Life SecureCare III Hybrid Life and LTC policy?
Overview. Minnesota Life is part of Securian Financial Group, an A.M. Best A+ rated, founded in 1877. The Minnesota Life Securian SecureCare policy is a Hybrid Life and Long Term Care Insurance (also called Combination or asset based) policy. With Traditional LTC policies, premiums can be increased and you may not receive any benefits if you do not need LTC. With Hybrid 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.
Minnesota Life Securian SecureCare III is Unique Because it is a Cash Indemnity Policy. There are two primary benefit payment methods among LTC policies. Reimbursement policies, the most common, require you to submit documentation of all expenses for reimbursement up to your monthly LTC benefits. Cash Indemnity policies pay up to your monthly LTC benefits, regardless of your expenses
Minnesota Life SecureCare III is Unique Because It Pays for Formal and Informal Care from Family and Friends. Most LTC policies prohibit informal care, particularly if the care is provided by a family member. The Minnesota Life SecureCare III policy allows you to use formal care providers (home care agencies or facilities) and informal care providers, including family and friends. Since informal care providers can be much less costly, you can obtain significantly more care with a lower monthly benefit. This is very valuable for home care.
Minnesota Life Securian SecureCare III Policy Options. The policy options include: Benefit periods of 4-8 years; Inflation protection of none, 3% simple, 3% compound, 5% simple and 5% compound; Elimination period of 90 days; Residual life insurance benefit (even if you deplete all of your LTC benefits) equal to the lesser of 10% of the face amount of insurance or $10,000 and a Return of premium vesting schedules of: Vesting: LTC protection with full value on the vesting schedule of 80% year 1, 84% year 2, 88% year 3, 92% year 4, 96% year 5, 100% year 6+; or 75%: Enhances LTC protection for a 75% return of premium paid at any point; or LTC Boost: Enhances LTC protection the most for the tradeoff of a return of premium equal to the policy’s guaranteed cash value.
How Minnesota Life SecureCare III Compares with Other Hybrid LTC Policies. Let’s look at a husband and wife, Bill and Sue, who are each 55 years old and reside in Maryland. They each pay a $100,000 one-time premium ($200,000 combined with State Life) and are expected to need LTC in 25 years at the age of 80. They are comparing Hybrid policies that offer the largest LTC benefits and inflation protection (unless noted otherwise) and prefer cash indemnity. See reimbursement policies in blue and cash indemnity policies in green in the chart below.
Minnesota Life Outperforms Competitors with High Monthly and Total LTC Benefits. Bill will have $11,534 monthly and $876,567 total LTC benefits, while Sue will have $9,859 and $749,279, respectively. Brighthouse SmartCare is notable for its option to link policy values to major market indices. Nationwide Care Matters II is a strong cash indemnity alternative for Bill due to its higher monthly and total LTC benefits and its 90 day with 0 day retroactive elimination period, and is notable for its U.S. medical care inflation option. Lincoln MoneyGuard Fixed Advantage is a strong alternative due to its 0 day elimination period. OneAmerica State Life Asset Care is a strong alternative due to its unlimited, lifetime total LTC benefits.
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Action Steps and Conclusions. Minnesota Life SecureCare III provides high monthly and total LTC benefits, with the flexibility of formal and informal care providers (including family and friends). 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.