In this episode of the Secure Your Retirement Podcast, Radon and Murs discuss the life insurance-based hybrid long-term care solutions, building on their previous conversation about hybrid annuities. They explore the advantages of a hybrid approach, particularly focusing on the MoneyGuard Fixed Advantage policy as an example. Radon and Murs explain how this product offers both a death benefit and long-term care coverage, making it an attractive option for those looking to protect their assets and ensure care later in life.

Listen in to learn about the key features of hybrid long-term care insurance, including tax-free benefits and flexibility in coverage options. Radon and Murs also dive into how these policies can be structured to provide peace of mind without the worry of losing premiums, unlike traditional long-term care insurance. Whether you're considering annuities or life insurance, this episode helps clarify the potential benefits and drawbacks of each option.

In this episode, find out:

·      The differences between hybrid annuities and hybrid long-term care insurance policies.

·      Key features of the MoneyGuard Fixed Advantage policy.

·      How hybrid long-term care insurance can protect your assets and provide tax-free benefits.

·      Why flexibility and elimination periods matter in long-term care coverage.

·      A comparison of long-term care and death benefits within hybrid life insurance policies.

Tweetable Quotes:

·      "With hybrid long-term care insurance, you're not just buying coverage—you’re securing peace of mind for both you and your heirs." – Radon Stancil

·      "This is about transferring some of the risk for long-term care, giving you options without losing the money you’ve invested." – Murs Tariq

Resources:

If you are in or nearing retirement and want to gain clarity on what questions you should be asking, learn what the biggest retirement myths are, and identify what you can do to achieve peace of mind for your retirement, get started today by requesting our complimentary video course, Four Steps to Secure Your Retirement!

To access the course, simply visit POMWealth.net/podcast.

Radon Stancil:

Welcome, everyone, to Secure Your Retirement podcast. Today, we are continuing our conversation around this idea of long-term care solutions. Just to give you a little bit of background, two episodes ago, we basically gave an overview of this idea that there's so many in the past options when it comes to long-term care where we would buy traditional long-term care insurance, the problem that people had with it was that you would pay premiums. You could pay premiums for many, many years and never need it, and then that just means that money went away. The other thing that has occurred here in the last few years is that premiums on those traditional long-term care policies have skyrocketed. What we described to you is that what we wanted to do over the next couple of episodes or maybe even more, is to break down what are some other options.

We talked about this idea of hybrid annuities, I'm sorry, hybrid long-term care insurance policies, one of those being a hybrid annuity, the other one being a hybrid life insurance policy. The episode right before this one, we went through a specific product that was all about an annuity and it said, "Here's how this annuity works. Here's how you would fund it." We walked through a specific example, and so we said, "Today, what we're going to cover is this idea of, well, what if I used a life insurance policy?" Now there's a couple of different ways to do either one of these. We don't have the resources or we don't want to take up all of your time trying to go through every single option. We just want you to understand the concept, so today, the focus is on a life insurance policy. Our plan is, is that we will try to do a comparison of the two so that next episode we'll say, "Hey, here's what we looked at. We looked at this annuity, we looked at this life insurance. Let's look at them side by side."

Today, we're going to focus on the life insurance part of things. Remember, it's a hybrid. What hybrid means is that it's got a death benefit and it also has long-term care coverage. All right, so we're going to walk through this particular product. Just so you know what the product is that we're highlighting here is called Lincoln is Lincoln Financials. That's the insurance company and their policy is called MoneyGuard, and that is the specific policy. It's Lincoln MoneyGuard and we're just going to walk you through the concept. We're not sitting here trying to tell you everybody should go get a Lincoln MoneyGuard. There's many options. We're not trying to push one product, we're just using it as an example. Murs, can you walk us through what this product does?

Murs Tariq:

Yeah. Like Radon said, this is a product geared towards long-term care. Anytime you're having a product that is geared towards long-term care, you don't expect for cash value growth to be tremendous. You don't expect for the life insurance aspect of it to be tremendous because you're really focusing on building up a long-term care bucket of money for use down the road. This is life insurance. A lot of times when people think of life insurance, they think of underwriting, they think of I got to fund it some way somehow over a period of time, which is premiums, and those are all true. What's nice about long-term care, a hybrid type of insurance policy is you got a few benefits that come with it. One is that it's guaranteed income tax-free for long-term care benefits. If we are in that scenario, if we cannot perform two out of the six activities of daily living, we can tap into this bucket of money without any taxation to it, so that's pretty tremendous. On the screen there, that's number one. Guaranteed income tax-free long-term care benefits.

Radon Stancil:

Hey, by the way, I know this is the first time you said on the screen. I just want to remind everyone I did this last time as well. We are using some visuals, so if you're listening to us on an audio version of the podcast, great, we're going to walk you through everything that's on our screen, but if you want to see some of these examples, there's two main ways you can do it. One is you can go to Spotify, the video there is in Spotify for their podcast platform, as well as YouTube. We have a YouTube channel called Secure Your Retirement as well, and all the video is there. Just want to say that because if we do reference what's on the screen, we're going to verbally walk you through it, but if you want to see the screen, you can go there.

Murs Tariq:

All right, the second one on your screen there is flexibility. The biggest thing that I would take out of this or what flexibility really means is that there's no elimination period. If you think back to the traditional, the old-school long-term care, premium pay type of policy where you pay in and if you don't use it, you lose it, that old saying. Those typically quite often have what's called elimination periods where you have to wait, say 90 days or 120 days before you can make a claim against the policy to have it pay you to help cover long-term care benefits. I've heard plenty of people say, "Well, that's just not fair. I got to wait 90 or 120 days. I could be dead by then, and all this policy I paid into, I never got any benefit for whatsoever." Well, that's where the benefit here is that there is no elimination period. You just got to qualify for those two out of six and it can move around based off of what your care needs are, from in-home healthcare to going outside of the home, helping pay for caregivers and family members.

All things like that, so it's rather flexible as far as how you use that bucket of money for long-term care. I keep saying bucket of money for long-term care, we're going to get into that as far as what that truly means. Care resources and services, so Lincoln is a very large company, a large insurance company, and they've got support and ways to help you get those claims paid and processed in a seamless manner. The big piece there, going back to number two is if there's no elimination period, it makes the whole process a whole lot more streamlined. Then legacy protection, so means you can leave a meaningful legacy if you have a bucket of money, again, for long-term care costs and you also get to take that tax free. Well, it's preserving assets outside of this particular account to be preserved for the legacy. We're just leveraging insurance to provide a long-term care benefit.

Radon Stancil:

Okay, so what we want to do is set this up as far as what we're talking about here. Again, we're just trying to give an example. This is a hypothetical, you have to go through underwriting in order to get this. The product we talked about last week was simplified underwriting. This is going to have full underwriting where you have to say, "Hey, am I healthy?" In this example, we used a 60-year-old female to say, "Well, what would it look like?" By the way, we also ran it out of North Carolina so that, that way, you would see what that looks like. Also, a four-year benefit, what would that look like? Now, can I give you an idea? What we have is we do have a premium that's going to go into this policy. The way this particular policy is structured is that you pay it all in 10 years.

After the 10th year, you're paid up. You don't pay any more premiums. Everything is guaranteed. I don't have to worry about rate increases, and so I'm fixed in those dollars. In this particular example, to get the benefit that we're looking for, and I'll just show you here, you'll see that we highlighted it. Your premium would be $9,422 per year. Now you might hear that number and go, "Wow, that's really high." Remember, you're paying it off in 10 years, so you're going to make this payment for 10 years and you're done. Now if you say, "I want to just pay it all upfront." You can do that and that might give you a little discount there on the premium, but we're just saying you're going to make a premium for 10 years and you're done. Your immediate benefit is going to be $5,000 a month for long-term care.

You're going right into this and saying that's what it would be. Now again, here on our guaranteed benefits, if you'll notice at age 85, what we're saying is, is that you're going to have a benefit now for long-term care of $10,469 that you will be able to use for your long-term care. What's happening in the policy, and we'll go through this a little bit more detail in the illustration, is that it's growing at 3% compounded interest. Now what's interesting, and we're going to show this again, I'm just trying to give you the highlights, you'll notice that this benefit here of the death benefit is 120,000. That means when I start the policy, I put in my first premium payment. If I were to pass away right then, my beneficiary is going to get 120,000 tax free because of the tax code doesn't tax life insurance.

That's not why we're doing it, but you just want to know that the life insurance is there. Again, I'm going to recap and then we're going to go through the illustration. Premiums for 10 years, immediate benefit, $5,000. What I know is that if I get a 3% compounded rate of return, I'm going to have a benefit of $10,469 per month at age 85, and I'm going to have an immediate death benefit of 120,000. All right, let's look at an illustration, and again, we're going to walk you through all the numbers and Murs is going to do that.

Murs Tariq:

Okay, so this illustration is basically creating a spreadsheet from what Radon just did on the previous slide. The first column here that we've highlighted is plan premium. That's showing from year one to year 10. That's that premium that you have to pay in. By the way, this is a guaranteed illustration. That means if we are utilizing this product, this is the absolute guarantee as far as how it's going to work. $9,422 per year is put in for the first 10 years and you'll see the total of what we put in over a 10-year period. You just multiply it by 10, 94,220 is our investment, if you will, into this policy for long-term care. The next thing we want to draw out is what Radon said is on day one of funding, your policy becomes enforced. You pay in 9,422, and on day one you immediately have a life insurance face value or what is called a death benefit amount of 120,000.

That means if you were to pass away, someone is going to receive 120,000 tax free, and there's a column to the right that says IRR, that stands for internal rate of return. Think about it, if you put in 9,000 and then you pass away and someone gets 120,000, that's a tremendous return. That's kind of how life insurance works. People say, "Hey, if I buy it and I die early." Well, someone wins. Someone wins really, really well. The more we put into it, that internal rate of return goes down. Again, that's not why we're buying it for, we're not buying it for death benefit. If you want a death benefit to maximize, that would be a completely different product. We're talking long-term care. Which leads us over-

Radon Stancil:

Can I just make one comment on this real quick?

Murs Tariq:

Yeah.

Radon Stancil:

The idea, remember that people in the past would go, "I don't want to spend this $94,000 and then it's poof, gone, and nobody got it. Here's what's being said in this illustration. If I put in 94,000 and I never need this policy for long-term care, I'm guaranteed $120,000 is going to my heir. The money doesn't go poof and go away, you're passing it along. You didn't use the long-term care benefit, but somebody's getting the money that you put in.

Murs Tariq:

Correct. Now on the right side of this illustration, we've got the long-term care reimbursement benefits, and you'll see that it's compounded at a 3% inflation factor. From day one, I kept saying bucket of money for long-term care, this is what I'm talking about. On day one, we put in $9,422, that's our investment, our death benefit. If something happens to us, someone gets 120,000. Immediately now, that bucket of long-term care is $251,018, or an annual amount of 60,000 or a monthly amount of $5,000 a month. This amount is designed the way this illustration is ran for it to last four years. You could kind of do the math, it comes pretty close to that. It's a four-year bucket of money for long-term care expenses. You'll see every year, it goes up by that 3%.

The 251 goes to 258, and if you go down to year 10, that bucket of long-term care has grown to 327,000, or on a monthly basis, 6,524. Well, you may say, "Well, why only four years?" Again, these products are not designed like the old ones that were premium pay and unlimited benefits. There's a reason that those products don't exist or because they've gotten really expensive is because unlimited benefits is not something that the insurance companies know how to truly insure anymore because of the cost of care and people living longer. What we are doing now is we're just trying to find a way to transfer some of that risk, maybe a small portion or a large portion of that risk, long-term care risk to the insurance company so you're buying a portion to go towards it. The longer we wait, obviously, it keeps going down. I think it takes us out to age 85 at some point. Every year, it's growing by 3%, so you'll see at age 79 at the bottom of the page, our initial was 251,000. It's grown to 440,000 of potential long-term care benefit.

Radon Stancil:

The key, I guess about this too, which we talked about at last week as well, is that this benefit that you would get, because you're using it for long-term care, it's not taxable, so this 6,000 that you would get a month. Now, this is just an illustration. We're hopefully not going to start this at 60 and then need it at 69. We did expand the illustration here just to show you some potential more realistic times. At age 80, my benefit now I'm going to have a bucket of money as Murs talks about, a 453,000 and a monthly benefit of 9,031. Again, that would come to me for my benefit tax-free in retirement, I'm sorry, in long-term care. You might be retired, but you'd also be in long-term care. Then I just did one more hit, age 85, which is typically around that age when somebody might need some help. Now my bucket is $525,575 or 10,4... Is that 69? Yes, 69.

Murs Tariq:

Yes. 469.

Radon Stancil:

10,469 there for my benefit. Again, this is not about trying... Murs made, I think a really good point. This is not about trying to cover every aspect. Because if we ran it from now to age 85, obviously, that's not going to cover all of your expenses, but it's something there to assist me if I were to need something for that care. Let's talk a little bit about how the policy works, Murs.

Murs Tariq:

Over on the left side of the screen, it works for in-home care, so it's been deemed. The big thing is the two out of the six, which will explain what those are on the right, but if you've been approved for long-term care, you get to choose how you want to do that. Do you want to go into a facility? Do you want to bring help inside the house? It gives you the flexibility again to where you could bring in-home care, you could go to assisted living, alternative care services, respite care, caregiver training, which is also important, and planning services to make sure your house is in the right shape and everything like that. Then nursing home if we need to go into that type of scenario. It's very flexible as far as how you use it. Again, it's pretty much a bucket of money as long as we qualify for a long-term care. Then the restrictions are limited as far as how you use that money once you've been approved for long-term care.

Radon Stancil:

Yeah, and then as Murs mentioned, you've got these activities of daily living, and those are, according to this definition, eating, bathing, transferring, dressing, toileting, or continence. Basically, if two of those I need assistance with, a doctor says I need assistance with two of those things, then I'm going to be qualified to be able to start taking my benefit. Then obviously, I have to continue to qualify if I got better, so you wouldn't really want to start this policy just on a temporary basis, but this is something that I'm going to need a long-term care scenario. Again, I just want to be clear on this, is that we are not trying to say that you should go buy a Lincoln MoneyGuard. We're not promoting it. We picked a product to walk you through the concept. There are multiple of those.

Before you were to make any decision on where you're going to go, you'd want to sit down with an advisor, talk through your situation, make sure that everything is understood. This is not a promotion of a particular product, it's an example, but it is to help you to appreciate if you have a desire or a care that you say I would like to have some kind of coverage. Well, then we're just trying to lay out some options. Next week, our goal is, in the next episode, is to now do a side-by-side, show you, "Hey, we talked about the annuity version, we talked about the life insurance version. Let's just do some pros and cons back and forth so that we understand what's the picture between the two." Our goal in this particular podcast is to help you think through options, it's not to sell you a product.

I hope that's been clear. If you have any questions or you want to talk things through individually, feel free to go to our website, pomwealth.net, go to the schedule call. Our calendar comes right up. We would love to hop on a phone call with you and talk through any of these things that you might want to discuss. Thank you very much. We hope you have a great week. We'll talk to you again next Monday.