Nationwide’s Indemnity Life Insurance and Long Term Care Combo
Life insurance remains a truly versatile product and will for many years to come. Nationwide’s life insurance policies with long term care (LTC) contracts are no exception to this. With many people discouraged by traditional LTC’s recent history of rate increases, life insurance policies with LTC benefits are beginning to see a large increase in popularity.
The purpose of this blog is not to debunk traditional LTC, but rather to explain another option for LTC coverage. Two products that Nationwide has to offer are very flexible for the consumer. Both the CareMatters hybrid and the YourLife No-Lapse Guarantee Universal Life contract with an LTC rider are excellent products. They are two of the very few products in the market that are “Indemnity” contracts.
An indemnity contract as compared to a reimbursement contract, provides the insured with a direct check from the insurer that can be used to pay anyone they wish, whether it is a care professional or not. The carrier does not require receipts as proof that a care professional or authorized facility provided a service. This is unlike a reimbursement contract that requires receipts to be submitted to them from the client or facility they are in as a means to “reimburse” an incurred expense.
The CareMatters product is a true “hybrid” policy in that it is a life insurance policy that has an LTC benefit “built-in” to the contract. It cannot exist offering just life or just LTC. It can be offered either as a single premium, 5-pay policy, or 10-pay. It has inflation options of either 3% Simple or 5% Compound and can provide LTC coverage for a maximum of 7 years.
The YourLife No-Lapse GUL has the option of being a straight life policy or adding the LTC rider on to it. Rarely do I recommend running it as a straight life policy when for 5-10% more in premium or reduction in benefit you can have the option of having a living benefit available in the form of LTC. However, if it is for estate preservation then that would be a valid reason for the former. This product has no inflation option and pays an LTC benefit for 50 months at an amount equal to 2% per month of the face amount of the contract. For example, if the life insurance face amount of the contract is $300,000, it would pay a $6,000 LTC benefit for 50 months. The contract is extremely premium flexible and can be set up on almost any pay cycle. You could do a 1035 exchange of $25,000 in the first year, pay $2,000 for 15 years after that and $750 for the last 10 years. This example, as long as the amount of premium going into the contract can create at least a $100,000 death benefit face amount.
About the author: Kyle McDonald holds FIC, FICF, FSCP® & CLTC designations. His viewpoint on life insurance is simple, “Anyone with a family must have life insurance. In the end, life insurance is for others you care about, not you.” He is ready to help you and your family get the best option available. Contact Kyle today at 1-800-651-1953 or KMcDonald@Pivot.com.