This document discusses the pros and cons of traditional long-term care insurance versus asset-based long-term care/life insurance. It argues that agents should recommend both options to clients rather than claiming one is definitively better, in order to make the most sales. While asset-based plans seem superior on paper, traditional plans plus a separate life insurance policy provide better benefits. The document levels the comparison between the options and notes that the best choice depends on individual client circumstances and goals. Agents are advised to understand both products well so they can recommend the optimal solution for each client.

1. Isaw another presentation proclaiming that
asset based long term care/second-to-die
life is better than traditional long term care
insurance (LTCI).
My position is: Do not stake out your claim,
get out your gun and defend to the death that
one is better than the other.
If you do, you will not make as many sales
as you would if you kept an open mind and
recommend what is best for the client based
on their circumstances. Do not be afraid
to objectively offer both and let the client
choose between “yes” and “yes”. Why be
a one trick pony and lose half of your sales?
When one does a deeper dive, the combo
product can fall short when compared to a
traditional LTCI plus a separate second-to-
die life contract. However, even though this
may be factually correct, it does not change
the reality that some clients are more com-
fortable with traditional while others prefer
asset based. Sell both!
Table 1 represents what we were shown
as “proving” why asset based is better than
traditional LTCI. The presenter compared
asset based to traditional LTCI stating:
1. Both traditional and asset based pay
a monthly benefit of $7,500 per month per
spouse.
2. The traditional pays up to $450,000
per spouse vs. unlimited benefits for the
asset based.
3. There is $187,500 of second-to-die life
insurance which would be reduced when
long term care benefits are paid until 100
percent of life benefit is gone. (NOTE: with
some other companies there is a 10 percent
residual death benefit).
4. The clients would have $56,884 of guar-
Which Is Best: Combo/
Hybrid Or Traditional
LTCI? Open Your Mind
And Double Your Sales!
L. NICHOLAS
HOGAN,
LTCP, LUTCF, is president of Insurance
Advisors, Inc., which he founded in 1994.
Insurance Advisors is a brokerage general
agencydedicatedtohelpingagentsthroughout
the country find the best products and services
for their clients. With more than 40 years
experience in the insurance industry, Hogan
hadpreviouslybeenacareeragentandmanager
withMassMutualandaregionalvicepresident
for Meridian Insurance.
Hogan received a BS from Xavier
University and Master’s from The Ohio State
University. Nationallyknownforhisexpertise
inlongtermcareinsurance, heisoneofthefew
Long-TermCareProfessionalCertifiedTrainers
in the country, a certified LTCI Partnership
trainer, a member of the American Society of
Actuaries Think Tank for Long Term Care
Insurance, and a long term care insurance
instructor for The American College.
Hogan can be reached by telephone at: 800-
471-7191. Email: nick@ialtc.com.
Table 1
Spouses / Partners Age
55 Preferred Class
Traditional LTCI
Maximum Benefits
Asset Based Long Term Care/
Life Maximum Benefits
Monthly Long
Term Care Benefit
$7,500 per Month
Per Spouse/Partner
$7,500 per Month
Per Spouse/Partner
Total Long
Term Care Pool
$450,000
Per Spouse/Partner
Unlimited Lifetime Benefits
Minimum
Death Benefit
$0 $187,500
Guaranteed Cash
Value Year 15
$0 $56,884
Annual Premium $4,628 $5,973 (Guaranteed)
RYAN K.
HOGAN,
CLTC,joinedInsuranceAdvisors,Inc.,in2014
as sales development director. He is skilled
in team development, strategic planning,
marketing, customer service, and coaching.
He brings a fresh perspective with a focus
on strategic planning and marketing and
providesInsuranceAdvisorsInc.,withaperfect
perpetuation plan.
Hogan graduated from the University
of Cincinnati with a degree in Electrical
Engineering and worked for two engineering
firms. Hogan’s outgoing personality, passion
for food and business management led him to
work in the food industry for 12 years holding
various titles from marketing manager to
generalmanager. Ineachinstancehepropelled
his stores to top performers. He now applies
these skills to help brokers achieve increased
growth and profits in their businesses.
Hogancanbereachedbytelephoneat:
800-471-7191. Email:ryan@ialtc.com.
B R O K E R W O R L D M A G A Z I N E
Reprinted from BROKER WORLD March 2016
Used with permission from Insurance Publications Subscriptions $6/yr. 1-800-762-3387
www.brokerworldmag.com

2. anteed cash value after 15 years.
5. They ended with, “For $1,345 more look
at all you get—life insurance, cash value and
unlimited benefits.”
What was not explained in detail was:
1. There are less expensive traditional
policies on the market.
2. When long term care benefits are paid
out, cash value and death benefit are both
proportionately reduced by the amount of
long term care benefit paid out. Clients are
“self-funding” long term care costs from
their cash value and life amount first.
3. If clients remove 100 percent of cash
value from the policy they no longer have
any life insurance or long term care benefits
left as the policy would be terminated. One
might ask, “What is the real benefit of having
this cash value?”
4. Nothing prevents one from buying a
separate second-to-die contract with the
difference in premium.
In table 2, I show a stand-alone tradi-
tional LTCI policy plus an optional second-
to-die life insurance policy:
Here is how table 2 was modified:
1. Used a better priced traditional policy.
2. Increased the benefit pool from $450,000
to $750,000 per spouse.
3. Added a shared care rider
4. Numbers two and three increase cou-
ple’s total pool to $1,500,000 which would
last a minimum of 8.3 years each or 16.6 years
for one spouse. From a practical view this
is virtually unlimited benefits.
5. Total cost for traditional LTCI reduced
to $3,585 leaving $2,388 that client can use
to buy a second-to-die policy.
If your client chooses to purchase a stand
alone second-to-die policy, in this example the
face amount would be $293,600. In addition,
the $293,600 is not reduced by any long term
care benefits paid. Your clients receive both the
long term care benefits plus the full face amount
of the life insurance!
A few other points:
With the traditional plan there is no
requirement to buy the second-to-die
policy; the client can simply save or invest
the $2,388 as they wish. In addition, premi-
Table 2
Spouses / Partners Age 55
Preferred Class
Traditional LTCI Plus
Optional Second-to-
Die Life
Maximum Benefits
Monthly Benefit
$7,500 per Month
Per Spouse/Partner
Total Long Term Care
Pool of Money
$750,000 Per Person $1,500,000 Shared
Riders Included
Waiver of Premium
Guaranteed Purchase
Option Shared Care
Rider ($1,500,000 Total
Pool Combined for
Couple) Flex Benefit
Cash Option
Shared Care Rider Means at
Max Benefits of $7,500 per
Month Policy Will Last
8.3 Years Each or Up to 16.6
Years for Either Insured
Premium
$3,585 Annually for
Both
Optional Second-to-Die
Life Policy
$2,388
Annually for Both
Provides $293,600 Death Ben-
efit Regardless of How Much
LTC Benefit is Received
Clients Receive Both!
ums on traditional LTCI may be deductible
through businesses or on a client’s personal
tax returns. Plus, this traditional policy
includes: a future purchase option allowing
clients to add coverage if desired and a cash
alternative allowing for greater flexibility.
Do not let your preference, or should I
say bias, get in the way of giving good solid
complete advice to your client and letting
them choose which way to go.
Now before you think I am pushing tradi-
tional over asset based, I am not. I am simply
leveling the comparison. When you are help-
ing your client determine whether combo/
hybrid or traditional LTCI is a better choice
for them, the answer will depend on their
circumstances: Health, assets, experiences
with family members, the ability to deduct
premiums, Partnership Plans and other
reasons. Learn the differences between the
products so you can recommend what is best
for your client. The fact is: Some long term
care coverage is better than none at all. No
matter which type is appropriate—have the
long term care discussion!
Before getting into some examples of
which kind of client might prefer one type
over the other, let’s discuss possible rate
increases on traditional policies. New
research is out from the Society of Actuaries
Think Tank for Long Term Care Insurance. Their
report states that traditional policies issued
in 2014 or after have a 90 percent chance of
not having future rate increases. And for
the 10 percent that might, they expect the
rate increase to be only eight to 10 percent.
Why? Companies have accumulated the
information they need and have re-designed
their policies appropriately.
Carrier product design changes that have
taken place over the past several years to
stabilize rates for traditional LTC include:
• No longer offering unlimited benefits.
• Assuming a zero percent lapse rate and
a much lower rate of return on investments.
• Eliminating “Unisex” rates except for
simplified issue multi-life.
• No longer offering a five percent com-
pound rider or charging substantially more
B R O K E R W O R L D M A G A Z I N E
Reprinted from BROKER WORLD March 2016
Used with permission from Insurance Publications Subscriptions $6/yr. 1-800-762-3387
www.brokerworldmag.com

3. for this rider.
Examples of When Asset Based or
Traditional Might Be a Better Fit (there are
always exceptions):
1. A couple in their fifties in good health
with between $250,000 and $500,000 in
liquid assets.
Traditional. Partnershipisveryimportant
to couples with modest assets and combo/
hybrid cannot be Partnership qualified.
2. A client age 67 with $700,000 in liquid
assets and has previously declined to buy
traditional LTCI.
Asset Based. In fact this is probably the
“perfect” client for combo/hybrid.
3.A business owner that controls a C-corp.
Traditional. Although he may have a lot
B R O K E R W O R L D M A G A Z I N E
Reprinted from BROKER WORLD March 2016
Used with permission from Insurance Publications Subscriptions $6/yr. 1-800-762-3387
www.brokerworldmag.com
of assets, premium is 100 percent deductible
through the C-corp. Consider a 10-pay and
do not throw away the tax savings.
4. A couple whose grandmother just got
a 40 percent increase on her traditional
LTCI policy.
Asset based. If the couple has assets.
5. A couple whose grandfather has col-
lected long term care benefits from his
traditional LTCI policy.
Traditional. Probably what this couple
would feel most comfortable buying.
6. A business owner that has assets and
also has health issues.
This could be either. A couple of asset
based policies may work if they have sim-
plified issue. Or, a better way to go may be
simplified issue multi-life LTCI, which is a
traditional policy with only six underwrit-
ing questions.
Conclusion:
Combo and traditional LTCI are both
excellent products! By knowing the differ-
ences agents can talk to many more clients
about long term care planning. Offering
both, many more policies can be sold. Most
important—the client wins and the agent
wins!
Remember—if your clients are not allocat-
ing some assets to cover long term care costs,
they are allocating ALL of their assets to
cover long term care costs!
Happy selling. 