Lincoln MoneyGuard III Review
Standard & Poor’s AA-
Lincoln MoneyGuard III is the replacement for Lincoln MoneyGuard II, which left the marketplace on November 1, 2019.
Therefore Lincoln MoneyGuard III will be 20-30% more expensive than other plans, depending on a number of factors.
If you’re interested in an Individual Policy, we recommend NationWide CareMatters II or Securian SecureCare. Both are Cash Indemnity Plans and are currently the most competitively priced Hybrid Long Term Care Policies as of Summer/Fall 2020.
Cash Indemnity Plans pay you a monthly cash stipend that you can use as you see fit. Lincoln MoneyGuard and others are “Reimbursement Plans” that require you to send in your receipts for reimbursement.
As for a Joint (Spouse) Policy, One America Asset Care has a great product, especially if one person is in better health than their partner. For this product, you can also use qualified funds (IRA, Pension, etc.).
If you have any questions or would like to see a personalized proposal feel free to call or email Cliff Marshall Here.
Continue reading to learn more about Lincoln MoneyGuard III
- How does Lincoln Moneyguard III Work?
- What are some Lincoln MoneyGuard III policy examples?
- What are the Lincoln MoneyGuard III specifications?
- Policy Disclosures, Exclusions, and Tax Incentives
- Concluding Statements
How Does Lincoln MoneyGuard Work?
Below are some examples and illustrations to help explain and visualize your potential policy:
Male, Age 60 $4500 a month LTC benefit LTC Duration: 6 Years-Inflation: 3% Compound– Return of Premium: Basic
Premium is $13,392 annually or $1,116 per month for 10 years.
If we take a look at the illustration below, once the policy is in force you have a total of $349,294 in long term care coverage, or $4,500 a month for six years. With the addition of the 3% compound your LTC pool begins to grow and by year 10 you have access to $5,872 a month in LTC benefits. By year twenty-five you have up to $9,148 a month in long term care benefits, and a total pool of $710,045.
The Death Benefit and Surrender Value both grow over the 10 year premium payment period. The Surrender Value remains at a constant peak of $93,674. The Death benefit slowly decreases due to intra-policy charges then stays constant $133,920.
Here is a further breakdown of of the proposal.
If you have any questions or would like to see personalized proposals feel free to Contact Us Here.
Male with Couples Discount-10 Pay: $10,000 annual-Age 60-LTC Duration: 6 Years–Inflation: 3% Compound-Return of Premium Basic
As we can see in this example, in the first year the initial $10,000 premium deposit equates to $305,576 long term care benefit in year one. In year 80, the Lincoln MoneyGuard Provided a staggering $551,914 per year in long term care premium. Compared to a single premium policy, the 10 Pay provides a higher leverage of upfront coverage. However, over the length of the policy the total benefit amount does not combine as substantially, as the premium is dripped in. Therefore if one is looking for a max amount of Long Term Care Benefit over the long term, a single premium is the best option. In year one the monthly maximum reimbursement is $3,937, in year 80 it is $7,110.
If you have any questions or would like to see personalized proposals feel free to Contact Us Here.
How does Lincoln MoneyGuard III Compare with Securian SecureCare and NationWide CareMatter II.
How does Lincoln MoneyGuard III hold up with the competition?
Compare the policies below using the same parameters for premium, benefit period, and the percent of the inflation rider.
Client-Aged 55 Male-Couples Discount-Inflation Protection 3% Compound-Benefit Period 6 Years.
Lincoln MoneyGuard Securian SecureCare Nationwide Carematters II
$4,083 $4,506 $4,703 Monthly
$5,235 $6,056 $6,320 Monthly(65)
$9,910 $10,937 $11,415 Monthly(85)
$70,000 $100,000 $87,892 Cash Value(85)
$106,147 $108,146 $112,872 Death Benefit(85)
In this example we are using the same parameters for premium, benefit period, and the % of inflation rider.
Initially, the policies are similar. As you age and are more likely to need the coverage, the Securian SecureCare and Nationwide CareMatters II policies offer a higher monthly benefit. Securian SecureCare and Nationwide CareMatters II are Cash Indemnity plans, making their relative value to Lincoln MoneyGuard even higher.
However, if you were to pass away at age 85 having never used the benefits, the Nationwide CareMatters II policy would provide the highest death benefit amount.
What are Lincoln MoneyGuard III Specifications?
- Lincoln MoneyGuard III Issue Ages: Range from age 30 to 80 for both males and females. Couples Discount applies to individuals who are legally married or are in a civil union or domestic partnership that is qualified as a common-law marriage in your state.
- Lincoln MoneyGuard III Issued Face Amounts: Requires a minimum face amount of $50,000 and allows maximum of $500,000. Death benefit (face amount) reductions are allowed after 3 years.
- Income Tax Free Long Term Care Benefits: Should the need arise, your policy has a provision called the Long Term Care Benefit Rider (LTCBR). This provision guarantees you the monthly reimbursement for all qualified long term care expenses. We can help you determine the average monthly cost of long term care in your area.
- Lincoln Money Guard offers two Return of Premium Options: 1.) The Basic, which maximizes your long term care benefits and returns 70% of paid premiums, or 2.) the Vested, which maximizes your return of premium and allows a return of 100% of your premium after year 10.
- Death Benefit: Lincoln MoneyGuard III works on a “Universal Life Insurance Chassis,” which means if the policy is never used or surrendered, the death benefit will be paid to your beneficiaries or heirs upon your death
- Guaranteed Premiums: Lincoln MoneyGuard III allows you to lock in guaranteed rates. Guaranteed rates can be paid with a single lump sum or on an annual, semi-annual, quarterly, or monthly basis.
- Streamlined Underwriting: As with most carriers, with a Lincoln MoneyGuard III policy, the initial requirement will be a telephone interview. If you are without any major health issues, you will often be approved after the initial telephone interview. Normally, no paramedical exam or blood test is required.
- Inflation Protection: Lincoln MoneyGuard III offers a 3% and 5% compound inflation protection rider to protect you from the rising costs of long term care.
- Pre-Existing Conditions: Lincoln MoneyGuard will not deny benefits for preexisting conditions.
- Tax-Advantages: There are tax advantages to both a Life Insurance Chassis, as well as the Long Term Care Benefits Rider. Both the Death Benefit and the LTCBR are tax free.
- Elimination Period: Once eligible, there is no deductible or waiting period for long term care benefits to begin.
- International Benefits: If you are abroad and are in need of reimbursement for a nursing home or an assisted living facility, it may be used for 36 months.
- Terminal Illness Rider: Lincoln MoneyGuard offers a one-time claim for 25% to 75% of the current specified amount of death benefit, up to $250,000. This rider is automatically included.
How does a Lincoln MoneyGuard Policy Work?
Lincoln MoneyGuard works on a Life Insurance Chassis, with a long term care rider, which reimburses you for qualified long term care expenses.
To be eligible for reimbursement, Lincoln MoneyGuard has the exact same benefit triggers as other policies.
When the policy is needed, a healthcare practitioner must verify to Lincoln that you are deemed as “Chronically Ill,” and that this state is expected to last longer than 90 days.
What does chronically ill mean? Chronically ill means you are unable to perform two of your six activities of daily living, such as:
Once deemed to be chronically ill, Lincoln MoneyGuard III will begin to reimburse you for long term care costs covered under the policy.
Some of the covered expenses include: home health care, adult day care, respite care, durable medical equipment, caregiver training, bed reservation benefits, alternative care services, nursing facility care, hospice care, transitional care assistance, home modifications, and assisted living facilities.
Lincoln MoneyGuard Disclosures and Tax Incentives
Below we will explore some of Lincoln Money guard Policy exclusions
The policy will not provides reimbursement for the treatments of:
- Care due to alcoholism or drug additions.
- Treatment arising out of an attempt(whether sane or mentally impaired) suicide.
The Lincoln MoneyGuard III death benefit is generally received by the beneficiary income tax-free under Section 101(a) of the IRS code and the Long-Term Care benefits paid are Not taxed as income under the IRC section 104(a). The own of the policy will also not pay no current income taxes on interest earnings credited to the policies gross cash value.
The Pension Protection Act of 2006 (PPA) changed the tax treatment of your MoneyGuard policy effective January 1, 2010. Based on our understanding and analysis of the PPA:
-Qualified Long-Term Care Rider changes will continue to be treated as distributions from your policy, but Lincoln will not report the distribution as taxable(Even if your policy is a MEC)
-Qualified Long-Term Care Rider charges will reduce the investment in the contract, but not below zero, as the charges are taken from your policy
-Once the investment in the contract has been reduced to zero, distributions for Qualified Long-Term Care Rider charges will come from any gain in the contract( but will still not be reported as taxable distributions. You will receive a 1099R form for the charges, but the charges are not reported as taxable.
Please note that the state income tax laws in certain states may not conform to the federal income tax treatment of the Qualified Long-Term Care
Rider charges described above. In such states, the charges may be treated as taxable distributions from the policy for state income tax purposes.
However, the federal income tax treatment described above will continue to apply to such charges.
It is important to remember that these rider charges now and in the future impact the policy’s cost basis. In the event any other financial
transaction is requested, such as a request to exercise the Return of Premium Provision, the cost basis is used in determining if that transaction
creates a taxable event. As previously noted, the cost basis is reduced as a result of these rider charges. Any Return of Premium Benefit paid
upon full surrender of the policy is treated, for Federal income tax purposes, as being funded in part by a refund of the charges taken from the
Long-Term Care Benefits Rider and in part by the value of the underlying policy. The full surrender of the policy may result in a taxable event and
the owner should consult his/her personal tax advisor regarding this and other applicable tax matters.
Here are some of my other product reviews Securian SecureCare, Lincoln MoneyGuard III, NationWide CareMatters II, Brighthouse SmartCare, MassMutual CareChoice One, One America Asset Care, Mutual of Omaha, American General Quality of Life.
Feel Free to Contact Us with Any Questions or Requests for a Personalized Proposal.