Named after President Lincoln himself, with permission from his son Robert Lincoln, Lincoln Financial Group has a well established history. Since 1905, Lincoln Financial has been providing life insurance for many Americans. With over 100 years of service, Lincoln Financial continues to be a pioneer in the insurance industry. Today Lincoln Financial provides not only life insurance to many Americans but also long-term care insurance as well.
Lincoln Financial is one of the few life insurance companies that offers a hybrid long-term care life insurance product. Lincoln Financial Groups’s hybrid long-term care insurance is called MoneyGuard II. It provides long-term care benefits with a return of premium option or a death benefit in the event they never need care.
When considering any hybrid long-term care insurance policy, we always encourage our readers to look at our post “5 Things to Consider Before You Buy Long-term Care Insurance.” In that post, we go over the 5 important factors to consider when looking at a hybrid long-term care policy. These are the 5 “things or factors” to consider:
- Long-term Care Benefits
- The Benefit Period
- Inflation Protection Options
- Elimination Period
- Premium Payment Options
Of the factors previously listed, the most important one is the LTC benefits that are provided for your money. In our review today, we will take a look at how MoneyGuard II compares to its competitors LTC benefits offering. We will also discuss some of its key features as well. Therefore, let’s begin by taking a closer look at MoneyGuard II to see what makes it stand out in the hybrid long-term care market place.
No Elimination Period
One of the key features of MoneyGuard II is its Elimination Period. The elimination period (also called the waiting period or deductible period) is the amount of days you have to wait before your benefits start. Generally, there is no reimbursement or retroactive payment of benefits for expenses incurred during the elimination period.
Now an elimination period of 90 days is generally standard when it comes to hybrid long-term care insurance. However, with Lincoln Financial’s MoneyGuard II, there is NO elimination period. Benefits are payable on the first day of care for eligible claims. This is great because there is huge cost savings for the policy owner when there is no elimination period. Let’s take a closer look why.
No Elimination Period Means Cost Savings
For example, the annual median cost of a private room in a nursing home is $78,475 in the state of Texas. That’s a cost of about $215 a day. If you had a 90-day elimination period, you would have to pay $20,000 out-of-pocket during that time before you can receive benefits! This money is not reimbursed and there is no retroactive payment of benefits for those 90 days. Therefore, with Lincoln’s MoneyGuard II, you would not have to pay an additional $20,000 before you receive your long-term care benefits. You would be receiving benefits from the first day you become eligible.
Comparison to other Hybrid LTC Products
In order to understand the value of what a carrier’s product offers, you must compare it to its competitors. Therefore, for our comparison, we will compare Lincoln Financial’s MoneyGuard II to Minnesota Life’s SecureCare. Lincoln Financial’s MoneyGuard II and Minnesota Life’s SecureCare are both very competitive & two of the best performing products on the hybrid long-term care insurance market.
Therefore, in our comparison, we will look at the long-term care benefit pool, the elimination period, return of premium options, and how benefits are paid. The case study we will be considering is a 60 year old male in Texas with a $100,000 single premium. The policies are designed to reflect a 6 year benefit period with 3% compound interest. Below are the illustrations reflecting our case study from Lincoln Financial and Minnesota Life:
(Click the illustration for a larger view. Information for comparison is underlined in red)
Looking at these illustrations, the first thing to consider is the LTC benefits. Based on the illustrations, Lincoln Financial offers a day one maximum monthly benefit of $5,219 while SecureCare offers $4,876. So from the start MoneyGuard II offers about $400 more in day one benefits in comparison to SecureCare. In addition, 20 years later at age 80, MoneyGuard II continues to offer more benefits than SecureCare. For MoneyGuard II the maximum monthly LTC benefit is $9,425 while SecureCare is $8,806. That is now $600 in additional monthly benefits that MoneyGuard II offers over SecureCare.
Now in regards to the elimination period, SecureCare requires a 90 day elimination period to be met in which no long-term care benefits will be paid. However, as stated earlier, MoneyGuard II requires no elimination period. Again, this can result in cost savings of thousands of dollars!
Factors to Consider – Return of Premium Option
So far MoneyGuard II is impressive in our comparison. However, there is one thing to be considered – the Return of Premium option. The illustrations reflect the lowest possible return of premium options. The reason for this is to display the maximum LTC benefit each company will offer you.
Lincoln Financial’s MoneyGuard II, lowest option is a built-in 80% return of premium from day one. Minnesota Life’s SecureCare, on the other hand, still offers a 100% return of premium at its lowest option. However, it comes with a 6 year vesting schedule before you can receive a full refund.
Now MoneyGuard II does offer a %100 Return of Premium option with a vesting schedule similar to SecureCare. However, the LTC benefits would be slightly reduced. This would result in MoneyGuard II’s and SecureCare’s LTC benefits looking near equal.
Therefore, what really makes MoneyGuard II stand out in our comparison with SecureCare is the feature of having no elimination period.
Another Factor to Consider – Reimbursement Vs. Indemnity
There are two ways benefits are paid during claims – reimbursement & indemnity. For example, Lincoln Financial’s MoneyGuard II is a reimbursement policy. Of the half-dozen or so hybrid LTC policies on the market, only two of them offer 100% indemnity benefit payments. Minnesota Life’s SecureCare happens to be one of those policies.
In order to receive benefits, whether reimbursement or indemnity, LTC claims requirements must be met according to your policy. A reimbursement policy will pay benefits to you or a LTC facility after submission of bills or receipts of LTC expenses incurred. Reimbursement will apply ONLY to qualifying expenses according to your policy. On the other hand, an indemnity policy gives the policy owner a set dollar amount check from their policy benefits. There is no need for submission of bills or receipts reflecting long-term care expenses incurred. So the question to be asked is “Which is better – Reimbursement or Indemnity?” The answer is that it all depends on what you find more beneficial for your needs.
The Benefits of Reimbursement & the Benefits of Indemnity
A reimbursement policy, like MoneyGuard II, provides peace of mind by ensuring benefits are being used solely for your long-term care. It also provides peace of mind by protecting against the misuse of policy benefits. Let’s consider for example if you were diagnosed with Alzheimer’s. At some point you will need a power of attorney because you are incapabale of handling your affairs. You can rest assured knowing your benefits can only be used to ensure your care and nothing else. This is unlike an indemnity policy where a family member handling your affairs just receives a benefits check with no oversight to ensure it is being used for your care.
On the other hand, an indemnity policy, like Minnesota Life’s SecureCare, offers the policy owner the flexibility to use their benefits for long-term care as well as any additional needs. For example let’s say you need a housekeeper after being chronically ill. You can use your benefits to pay for that in addition to your long-term care services.
Now some industry experts like indemnity benefits because you can pay a loved one to be your caregiver. Now you may be able to pay a loved one for informal care with an indemnity policy. HOWEVER, that is not a selling point we support. The point of long-term care planning is to relieve your loved ones from the all-consuming burden of being your caregiver. It is not to give them the option to do so – even if you can afford to pay them.
From our review, Lincoln Financial Group’s MoneyGuard II is a quality product that offers very strong long-term care benefits in the industry. With no elimination period, it offers day one coverage that results in huge cost savings. If an individual is considering a Hybrid Long-term Care policy, Lincoln Financial’s MoneyGuard II is worth considering.
Therefore, if you are interested in MoneyGuard II or you are looking to plan for long-term care in general, reach out to us now! Request a free quote or give us a call to start the conversation today!