Nationwide is a Fortune 100 company that has been around over the last 85 years. No longer just an auto insurance company, Nationwide now offers a full range of insurance products. One of those products happens to be hybrid long-term care life insurance. Nationwide’s hybrid long-term care insurance is called “CareMatters II.” Anytime we review a hybrid LTC policy we look at the “5 Things to Consider Before You Buy Hybrid Long-term Care Insurance.” Click on the link to read the post if do not know what are those 5 things.
Basically we will be comparing the product to its competitors based on:
- Long-term Care Benefit Amounts
- Benefit Periods
- Elimination Periods
- Inflation Protection Options
- & Premium Payment Options
However, before we start our comparison, let’s take a look at some of the key features of CareMatters II. Let’s see what makes it standout in the hybrid long-term care insurance market
Generally speaking, almost all hybrid long-term care insurance policies provide benefits in the form of reimbursements. However, Nationwide CareMatters II is one of maybe two policies on the market that’s an indemnity policy. With an indemnity policy, monthly benefits are paid at a set dollar amount. They are not based on the insured’s long-term care expenses. Therefore, there is no monthly requirement to submit bills or receipts of long-term care expenses in order to receive your benefit payments.
First, Nationwide will determine if the insured meets the policy’s long-term care claims requirements. If eligibility requirements are met, Nationwide will provide the policy owner their monthly benefit check. Check amounts are based on the maximum monthly LTC benefit amount that you qualify for in your policy.
Guaranteed Minimum Death Benefit
Nationwide CareMatters II offers a very competitive guaranteed minimum death benefit. The guaranteed minimum death benefit is typically 20% of the specified amount, assuming there were no loans or partial surrenders in the policy. The specified amount is the amount used to determine LTC benefits and the death benefit in a policy.
Inflation Protection Options
CareMatters II is very unique as it is the only hybrid that offers a U.S. Medical Care Inflation Option. This is an index rate inflation protection option as oppose to a fixed 3% or 5% inflation protection option. Under this option, the maximum monthly LTC Inflation Benefit Rider Amount will be based on the greater of the performance of a Reference Index (subject to a floor rate of 0% and a cap rate of 6%) and a fixed LTC Rollup Inflation rate of 2%. The Reference Index is currently the Medical Care Component of the Consumer Price Index for All Urban Consumers, Unadjusted.
Elimination Period (Retroactive Payments)
Nationwide’s CareMatters II is even more unique as it pays retroactive long-term care benefits for the elimination period. Once the 90-day elimination period is met, LTC benefits will be paid for those 90-days along with benefits for the first month after your elimination period. Although you had to wait 90-days to receive your first benefit payment, you will receive benefits for the time you had to wait. No other hybrid LTC policy on the market offers retroactive payments for the elimination period.
Premium Payment Options
Nationwide CareMatters II stands out with its premium payment options as well. Individuals can now pay premiums to age 65 or all the way to age 100. These payment options are subject to age limits. Nevertheless, this is unique as most competitors, including Nationwide, only offer a 5 year, 10 year, or a single pay option.
CareMatters II also offers the policy owner the option to pay a larger lump-sum premium at the time the policy is issued along with smaller recurring premiums. The recurring premiums can be for a period of 5 years, 10 years, to attained age 65, or to attained age 100. This works well for someone who wants to do a 1035 exchange or transfer but the funds are not adequate enough to buy a sufficient policy for their needs. The amount and timing of premium payments will be fixed and determined at policy issue.
Undoubtedly, CareMatters II stands out with some very interesting & unique key features. However, as stated in our post “5 Things to Consider Before You Buy Hybrid Long-term Care Insurance,” one of the most important things to consider when analyzing a policy is the amount of LTC benefits offered. The best way to do this is by comparing CareMatters II to some of its competitors. So let’s do a side by side comparison of Nationwide’s CareMatters II, Lincoln’s MoneyGuard II, and Pacific Life’s PremierCare.
The illustrations of CareMatters II, MoneyGuard II, & PremierCare are for a male age 60 with a single premium of $100,000 & a benefit period of 6 years. (Click the illustrations for a larger view)
Now the illustrations were designed to be as identical as possible in regards to premium input, payment option, benefit period, & inflation protection. (Note: PremierCare does not offer a 3% compound option so we selected 5% compound). The illustrations were designed for a 60 year old male in the State of Texas.
At first glance CareMatters II offers a competitive first day maximum monthly LTC benefit amount. It offers a benefit of $4,800 while PremierCare is $1,300 less in benefits at $3,500 a month. However, CareMatters II falls $400 short of Lincoln’s benefit amount of $5,200 a month. Nevertheless, CareMatters II appears to be competitive. However, there are a couple of things that we must consider.
The Inflation Protection Option for Pacific Life’s PremierCare
First, Pacific Life’s PremierCare is illustrating at a higher inflation protection amount. It is illustrating at 5% compound inflation protection as oppose to CareMatters II 3% compound inflation protection. Hence, Pacific Life’s PremieCare illustration will have reduced first day LTC benefits on a comparative level to the Nationwide’s CareMatters II illustration.
Return of Premium Option for Nationwide’s CareMatters II
Second, we must take into consideration the Return of Premium (ROP) options available for each individual product. All three product illustrations reflect their lowest available return of premium option. However, CareMatters II has a substantially lower return of premium option out of all three. This is important as it affects each products overall LTC benefit. Let’s examine this further.
Lincoln Financial’s MoneyGuard II least available ROP option is an 80% return of premium. Pacific Life’s PremierCare least available ROP option is a vested schedule of 15 years. This means at year 15 you get a full return of premium. In comparison, however, Nationwide’s CareMatters II least available ROP option is the Cash Surrender Value of the policy. This option provides the lowest return of premium value in the early years and the most LTC benefit for a given premium. So what does this all mean?
It means based on the illustrations, it would take Nationwide’s CareMatters II 21 years to offer a return of premium that Lincoln’s MoneyGuard II offers on day one. Also, it would take 34 years to offer a full return of premium that Pacific Life’s PremierCare offers at year 15. Hence, it would take Nationwide’s CareMatters II a very long time to offer you your money back if you changed your mind! This is especially true in comparison to Lincoln’s MoneyGuard II and Pacific Life’s PremierCare.
Comparison of Benefits at Age 80
We know, these products include inflation protection. Therefore, let’s look at the illustration’s projections for the LTC benefit amount at age 80. The reason to look at an illustration’s LTC benefits at age 80 is because that’s the average age when most long-term care claims begin.
(Click the illustrations for a larger view)
At age 80, CareMatters II is illustrating a maximum monthly LTC benefit amount of $8,446. On the other hand, Lincoln’s MoneyGuard II is illustrating a maximum monthly benefit amount of $9,425. That’s about a whole $1,000 more in monthly benefits than Nationwide’s CareMatters II!
Interestingly as well, Pacific Life’s PremierCare is illustrating an LTC benefit amount of $9,378 at age 80. If we recall, Pacific Life’s PremierCare started out as $1,300 less than CareMatters II in first day monthly LTC benefits. However, it now offers $900 more in monthly LTC benefits than CareMatters II at age 80. As time progressed, with the inflation protection, Pacific Life’s PremierCare outperformed Nationwide’s CareMatters II.
So what are the takeaways about this products performance? CareMatters II is a decent product that can work well for the right individual. Here is where CareMatters II can be viable option for long-term care planning needs:
- If a person is concerned about receiving benefit payments by having to prove their LTC expenses every month
- If an individual would like to receive retroactive benefit payments for there waiting period
- If a person needs flexibility in their premium paying options
- If a person wants the all of the above features plus reasonably competitive LTC benefits.
- If a person wants all of the above features and has no interest in a return of premium option
If an individual’s concerns are in line with several of the points above, then CareMatters II is worth discussing. Otherwise, as we have seen, there are more competitive products on the market that offer stronger LTC benefits. This is not to discredit CareMatters II. Instead it is to reflect that everything comes at a cost. The strength of your LTC benefits can be affected by all the options you choose. The more premium dollars spent on added benefits, is less dollars spent on LTC benefits. Nevertheless CareMatters II may make perfect sense for the right person and right circumstance.
If you are interested in CareMatters II, MoneyGuard II, PremierCare, or you are looking to plan for long-term care in general, reach out to us now! Request free quote or give us a call to start the conversation today!