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 including hybrid long-term care life insurance.
A Breakdown of Nationwide’s Care Matters II
Nationwide’s hybrid long-term care insurance is called “CareMatters II.”
(If you are not familiar with how a hybrid LTC policy works, please read our post “What is Hybrid Long-term Care Insurance?”)
Anytime you consider a hybrid LTC policy, you look at the 5 things that affect the quality of a hybrid LTC policy. We use those 5 factors to compare a hybrid LTC policy to its competitors.
Here are the 5 factors:
- Long-term Care Benefit Amounts
- Benefit Periods
- Elimination Periods
- Inflation Protection Options
- Premium Payment Options
(For a description of the 5 factors and how they affect a hybrid-LTC policy, feel free to read “5 Things to Consider When Choosing a Hybrid LTC Policy.”)
Now let’s review some of key features of CareMatters II before we compare it to its competitors.
Almost all hybrid long-term care insurance policies pay benefits in the form of reimbursements. However, Nationwide CareMatters II indemnity policy. It is one of maybe two policies on the market that pays benefits in this manner.
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.
Index Inflation Protection Option
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 however. Nevertheless, this is unique as most competitors only offer the standard 5 year, 10 year, or 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 option 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.
Comparison to other Hybrid LTC Products
Undoubtedly, CareMatters II stands out with some very interesting & unique key features. However, as stated in our post “5 Things to Consider When Choosing a Hybrid LTC Policy,” 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).
From the illustrations, CareMatters II offers a competitive first day maximum monthly LTC benefit amount:
- MoneyGuard II offers a benefit of $5,200 a month
- CareMatters II offers a benefit of $4,800 a month
- PremierCare offers a benefit of $3,500 a month.
Although CareMatters II offers $1300 more a month than PremiereCare, it falls short of MoneyGuard’s offering by $400.
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. The reason for this is the lowest return of premium value will reflect the most LTC benefit for a given premium by each company.
CareMatters II offers a substantially lower return of premium option out of all three of its competitors.
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 100% return of premium with a vested schedule of 15 years.
- Nationwide’s CareMatters II least available ROP option is the Cash Surrender Value of the policy.
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!
If return of premium option is important to you, this can be a concern.
Comparison of Benefits at Age 80
Let’s take a look at the illustration’s projections for the LTC benefit amount at age 80. The reason we 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 the illustrations shows:
- CareMatters II offers a maximum monthly LTC benefit amount of $8,446
- PremierCare offers a maximum monthly LTC benefit amount of $9,378
- MoneyGuard II offers a maximum monthly LTC benefit amount of $9,425
Both competitor products of CareMatters II offer almost $1,000 more in benefits.
If we recall, based on our illustrations, Pacific Life’s PremierCare started out as $1,300 less than CareMatters II in first day monthly LTC benefits. However, PremiereCare will offer $900 more in monthly LTC benefits than CareMatters II at age 80.
Based on the illustrations, with the inflation protection Pacific Life’s PremierCare would outperform Nationwide’s CareMatters II
Conclusion – CareMatters II Gives You Options
So what are the takeaways about this products performance?
CareMatters II is a decent product that may be suitable for the right individual.
Here is where CareMatters II may be a viable option for long-term care planning needs:
- Concerns about receiving benefit payments by submitting LTC expenses every month
- Interest in receiving retroactive benefit payments for an elimination period
- Needing more flexibility for premium paying options
- Wanting the all of the above features plus reasonably competitive LTC benefits.
- Desiring all of the above features and has no interest in a return of premium option
If your 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.
None of our review is meant to discredit CareMatters II. It does highlight the point however that everything comes at a cost. The strength of your LTC benefits can be affected by all the options you choose. The more your premium dollars are spent on added benefits, the less your dollars are spent on LTC benefits.
Nevertheless, to reiterate, CareMatters II is a decent product and may be suitable for the right person.
If you are interested in CareMatters II, MoneyGuard II, PremierCare, or you are looking to discuss a long-term care plan, reach out to us now! Request a Free No Obligation Consultation or give us a call to start the conversation today!Get Your Free Consultation