Editorial Comment from Jonathan A Shaw, CLU ChFC 
GUARANTEE YOUR CLIENT'S LIFESTYLE WITH JOHN HANCOCK'S GUARANTEED UL WITH LTC RIDER
Ask your client how they have prepared for ravages of Long Term Care on their Lifestyle and you will probably find that they have made no plans at all. Most people count their retirement funds twice when they estimate the cost of LTC. Which assets will they sell first? But if these are income generating assets, won't that create decreased income down the road to provide this benefit?
A good financial advisor will push your client towards more safe investments, with lower yields as they approach retirement. The problem of course is that low risk investments are only yielding around 2% today.
Would it make more sense to replace these low risk investments with a combination life insurance policy with a long term care rider? Why would we recommend this type of product instead of a traditional long term care policy? There are several reasons:
First of all, the long term care rider, connected to the life insurance policy provides two extremely important benefits to your client:
1. The premium is guaranteed from the onset of the policy, including the LTC rider premium.
2. If the client spends little or no time in an LTC facility, the Life Insurance pays a handsome tax-free benefit. At Life Expectancy the tax free benefit of the life insurance is between 5% - 7%, depending on the age and underwriting class. Obviously, death benefits prior to Life Expectancy pay huge rates of return.
3. The design of a Life Insurance policy with the LTC rider gives your client more flexibility of premium design.
Case Study
Male Age 60, Standard Nonsmoker, needs life insurance and LTC protection
First the client considered purchasing A LTC product from John Hancock. That premium was $2,700 for a lifetime pay policy of $200 daily benefit. In addition, the client was going to purchase a 20-year term policy for $ 250,000 with West Coast for about @ $2,400, for a total outlay of around $5,100 a year.
Our solution was to purchase John Hancock's Protection UL. We solved for a single premium to pay-up the policy for 20 years and then resume premium payments when the client turns 80, using the catch-up provision.
The client was very surprised that the single premium was only $61,000! The reason we suggested paying a single premium that would carry the policy for 20 years:
1. This was a more accurate comparison to the 20-year term policy the client was willing to purchase.
2. We are purchasing this policy to protect our client from premature death or LTC expenses. Since we can design the premium structure ourselves, why pay now for expenses that may not exist in the case of a premature death?
3. Remember the guaranteed premiums down the road are paid with substantially discounted dollars due to inflation.
Because of the guarantees in this contract, the premium guaranteed to be paid annually for life would only be about $8,000 and would not be required until age 86! This was the perfect solution for this client. He had non-performing mutual fund with just about $61,000 of cash in it. Now they have a guaranteed nest egg and a LTC benefit which will protect their lifestyle forever!
Call me to help you stratigize on you next case.
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