For several years, we have used hybrid LTC to help clients find use of old life policies and reposition bank/CD funds to protect their assets from a prolonged chronic illness.
With Lincoln’s MoneyGuard exit in NY, Nationwide remained as one of the only viable carriers for these opportunities.
Unfortunately, that product, YourLife Carematters, had a lot of restrictions. Notably, it did not have separately identifiable premiums which allow for substantial tax deductions for self-employed, especially for 60+. It also was severely limited in funding options, with the longest pay period available being 10 years. Finally, the only inflation options were 3% simple, which is often not sufficient or 5% compound, which is very expensive.
All of these deficiencies have been rectified with the launch of CareMatters II in NY. Currently available, three major enhancements now make this product very compelling for a wide range of clients.
Client Profile
State: NY
Ages: 50-70
Funding: Non-qualified assets, either in a life policy or bank/brokerage
Objectives: Desires long-term care insurance with guaranteed premiums and a death benefit
Has assets that they wish to protect from long term/chronic care expenses
Optional/Optimal: Has at least one person on their tax return who is self-employed
Separately Identifiable Premiums
This is a critical feature of any hybrid long-term care policy if your client is self-employed and wants to take advantage of the substantial tax deductions allowed by the IRS.
We previously published a detailed article on how this works. Take a look here and let us know if you have any questions.
Funding Options
Many of these policies are funded with a single pay, often via 1035 or from bank assets. However, there are clients who would rather pay over time or don’t have the resources to immediately write a large check (since their assets are tied up in qualified accounts or real estate).
Previously, this product only allowed for a single, five, or 10 pay design.
CareMatters II has two additional premium payment options, pay to age 65 or, most importantly, life pay.
Life pay is one of the most popular multipay options, since it has the lowest premiums overall. Since traditional LTC insurance is also normally structured as a life pay, it is an easy transition and allows for side by side comparisons. And, while a hybrid is typicaly more expensive on a dollar for benefit basis, it does have a substantial death benefit if unused funds and has guaranteed premiums. Those two features often tip the scales to choosing the hybrid.
Additional Inflation Option
As mentioned earlier, 3% simple and 5% compound left a glaring hole in the inflation options in the old YourLife CareMatters products.
Take a look at the comparison below. The example uses a 60yo male on a 10 pay. We’re solving for 20k/mo for 6 years at age 85.
| Inflation Option | 10 Pay Premium | Day 1 LTC Monthly Benefit |
| 3% Simple | $24,894.54 | $11,430 |
| 3% Compound | $23,198.00 | $9,550 |
| 5% Compound | $21,508.87 | $5,906 |
From the above chart, you see that the 3% compound options fills a very important need; It has a great balance between premium cost and day one coverage. Day one coverage is very meaningful should your client encounter an earlier than expected challenge such as dementia, Parkinson’s, or stroke.
Conclusion
The launch of CareMatters II in NY provides a hybrid LTC product that is competitive nationally.
While some other states still have superior products, this policy is much more in line with what typical benefits look like nationally. That means that the client gets a meaningful benefit for their premium dollar and can now customize their policy well beyond what was previously available.
Whether you have a client with an old life insurance policy that has cash value which they no longer need, a self-employed client who wishes to take advantage of the tax deductions while they’re working, or a client who wants the least expensive premium (via life pay), CareMatters II NY is a great solution.