Low, low interest rates may not been much easier on writers of life-long-term care (LTC) hybrid products than they’ve been on writers of stand-alone long-term care insurance (LTCI) policies.
But the hybrid products are still here, and they now have room to catch advisors’ and consumers’ eyes.
Lincoln Financial Distributors, a unit of Lincoln National Corp., Radnor, Pa., has been selling the MoneyGuard option, an insuranced-linked LTC benefits feature, with universal life (UL) policies since 1988.
The company estimates in linked-benefits product marketing materials that it has sold about 60,000 UL policies with the feature since was introduced.
Lincoln reported in mid-2011 that it had increased the number of advisors recommending the linked-benefit UL to their clients by 61%.
Linked-benefit UL sales for all of 2011 jumped 72%, to $186 million, the company said in a financial report filed with the U.S. Securities and Exchange Commission.
The LTC product “has become a significant part of our business,” according to Andrew Bucklee, the head of MoneyGuard Solutions distribution at Lincoln Financial Distributors, a unit of Lincoln National Corp., Radnor, Pa. (NYSE:LNC).
Lincoln uses several riders in most states, and a separate set of riders in New York state, to offer the MoneyGuard feature. The heart of the program is a rider that gives an insured who needs help with two or more activities of daily living, such as eating or bathing, the ability to accelerate payment of the death benefit to help pay for LTC services. The rider can help the recipient pay for home care or adult day care services as well as nursing home services.
If the policyholder uses the LTC benefits feature, Lincoln will replace the original death benefit with a smaller death benefit.
A 60-year-old woman who bought a “linked-benefits” UL policy might pay a $100,000 single premium for a $170,000 death benefit. If she needs to use the policy to pay for LTC services, she could get up to $500,000 in LTC benefits, Bucklee said.
Lincoln started out requiring a full-length underwriting process when it introduced they life-LT hybrid product. In 2006, the company eliminated the need for clients to go through physical exams. Rider buyers now go through a limited underwriting process, Bucklee said.