Questions carriers don’t want you to ask about life and care solutions 

There’s been plenty said about the growing need for care: rising costs, demographic changes and legislation are top of mind for many brokers and employers. My colleague Frank Morang did an excellent job in a recent release in Rough Notes discussing reasons why the market may be trending towards hybrid life and long-term care solutions. So there’s clearly a need for care, and if the market is trending towards hybrid products, it begs the question: What’s the right life insurance and care solution for you?

Well, as much as my heart wants to tell you the correct answer is “Trustmark’s product”, it’s not that simple (and not only because we have three unique products). The truth is, there are a lot of products on the market, each with relative strengths and weaknesses. Different situations will call for different products.



With that in mind, here are the questions that carriers may find tricky to answer, but are important to ask to start to differentiate the products in the market:

Product structure

Product structure can often break down into a question of stability vs flexibility:

• What type of life insurance product is being offered?
  • We’ve seen these products built on different chassis: whole life, universal life and even term. Each of these structures has benefits and drawbacks, and even within these types of life insurance there can be significant differences from one insurer to another. Knowing the structure can often lead to other questions…
• How much flexibility is available?
  • Products like universal life can be structured many ways, with benefits designed to last to many different ages and with some more or less conservative in design. Universal life typically offers the flexibility to adjust payments or the death benefit, but policyholders need to be thoughtful about how this impacts their policy. Other permanent life products may be fully guaranteed and can offer more stability, but you may sacrifice having the flexibility of universal life and policyholders may pay more in premiums.
• Can the product change?
  • Are premiums fixed or flexible?? Could costs increase based on claims experience? Do the same terms apply to both the life and care portions of the contract (i.e. is one guaranteed while the other is not)? This will help you in understanding where there is risk in the contract. Insurers have much more experience with life insurance than benefits for LTC, so it’s important to understand what parts of the contract the insurer has flexibility to change (if any).

Death benefits

The appeal of these products can often come from the fact that it is not a “use it or lose it” proposition. Even if the insured never requires care, their beneficiary will receive a death benefit. While the death benefit payment may seem straightforward, you might want to consider:

• Is death benefit restoration available and how does it work?
  • You may be able to restore the death benefit that’s advanced to pay for care. But, it’s important to know exactly how the death benefit gets restored. Is it fully restored to the original amount? Is it restored immediately?
• Is it possible to reduce the death benefit in later years as needs change?
  • Some products allow for changes in the death benefit (either scheduled or at the policyholder’s discretion as discussed above). With some products this will impact the care benefits, but with others it will not. It’s important to understand the difference.
• What happens if a policyholder doesn’t want to pay for coverage anymore?
  • Some policies may include cash value that can fund the policy for a period after payments stop (or be taken as cash if the coverage is no longer needed). With other policies, you may be able to maintain a level of coverage even after you stop paying premiums. Be sure to ask what that looks like and what options are available.

 Care benefits

 The rise in the need for care means that, for many, care benefits take on even greater importance. Make sure to ask:

• What kind of care benefits are available?
  • Different groups will have different care needs. Are benefits available for professional care only? Or can you receive benefits for family caregiving as well?
• Is permanency a requirement for care benefits?
  • Some products may require that the policyholder’s need for care be permanent before they’ll pay benefits.
• Can you extend care benefits?
  • Features may be available to extend the amount of care benefits available to policyholders.
• Will you be able to collect care benefits up to the full face amount of the policy?
  • Some hybrid products have a death benefit that reduces at some point in the life of the policy. Depending on the product design your care benefit may or may not reduce when the death benefit reduces. Other products may pay a discounted care benefit, meaning that your death benefit will be reduced by a greater amount than the care benefit you collect. It’s important to know what the product does so there are no unexpected surprises when you go to collect care benefits.

These questions can help set you on a path to determining the right product for your employee group, but they are by no means exhaustive. Your best bet may often be talking to a sales representative who can talk you through some of these nuances in more detail with an understanding of your specific needs. At Trustmark, we try to make that conversation as easy as possible by providing several different products, all of which are viable solutions for your life and care needs.