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The Trade-Offs of Asset-Based Products

Bob Maruska
LTC & DI Specialist

I have been reviewing some different plan designs, and I have a question for you: Have you taken time to review and study the moving parts and riders of the various asset-based plans? Do you know the differences in the four Asset-Based Long Term Care products offered by FHC? What is most important to your client in case design?

Here are some things to consider:

  • The monthly benefit
  • What is the max death benefit?
  • How does the ROP work?
  • How does the elimination period work (Service or Calendar day)?
  • Do you want Indemnity or Reimbursement for a claim?
  • What inflation options are available?
  • Does the product have a Residual Death Benefit?
  • What are the priorities for the client?
  • What is the budget for this plan?

If your client wants the maximum monthly benefit, you will probably have a trade-off with another benefit. It could affect the ROP or the Elimination Period. If your client wants 100% ROP, getting it could reduce your death benefit or increase your elimination period, depending on the carrier.

If your client wants the Indemnity option for claims versus the Reimbursement method, you are probably looking at smaller monthly benefit in the early years and possibly a larger benefit in later years, depending on the inflation option. Some products only offer compound inflation options. Some carriers offer both simple and compound inflation options.

The elimination period could be zero for both Home Health Care and Nursing Home. It could zero for Home Health Care only and 90 days for Nursing Home with another carrier.

These are all fine products. The right choice will come from your conversation with the client and discovering the client's wishes. I am often asked by advisors which product is the best. That is a very difficult question to answer. I have created a small reference guide below with four questions to ask yourself and your client during plan design. The elements to consider include Elimination Period, Calendar or Service days, the importance of Liquidity/ROP, and how claims are paid - Indemnity or Reimbursement.

  Lincoln Financial
Asset Care
Pacific Life
Home Health Care: 0 Days
Nursing Home:
0 Days
Home Health Care: 90 Days
Nursing Home:
90 Days
Home Health Care: 30 Days
Nursing Home:
60 Days
Home Health Care: 0 Days
Nursing Home:
90 Days
Calendar or Service Days? N/A Calendar Service Calendar
ROP 80% - All Years 100% - 6th Year Varies by
plan design
100% - 1st Year
Claims Reimbursement Indemnity Reimbursement Reimbursement
Residual Death Benefit Yes Yes No Residual Yes

The final item to talk about is underwriting. Currently, OneAmerica seems to be the best for difficult cases. As always, feel free to call us with your client's specific needs and circumstances. We are here to assist you with any questions or quotes!

BOB Maruska | LTC & DI Specialist   636.695.2826   bmaruska@FIRSTHEARTLAND.COM

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