Nationwide CareMatters II: Life Insurance With Cash Indemnity Long Term Care Benefits
May 17, 2019
Finally. Nationwide has finally updated its CareMatters cash indemnity long term care insurance policy.
Initially released by Nationwide in 2013 as a unique - albeit much higher priced- alternative to the standard reimbursement hybrid long term care policies such as Lincoln Moneyguard III, the original Nationwide CareMatters policy pricing and benefits had gotten stale. Competitor LTC insurance policies have become stronger and new cash indemnity long term care policies such as Securian SecureCare have entered the marketplace with more aggressive pricing than the original Nationwide CareMatters policy could offer. Needless to say, Nationwide was in dire need of improving its CareMatters policy with stronger coverage options and lower insurance costs to stay competitive in this long term care insurance marketplace.
Today, I can say that the Nationwide Care Matters II policy is certainly a massive improvement.
At the very least, this new Nationwide CareMatters II policy is squarely back in the long term care insurance policy conversation, if not leading the pack.
Let's take a closer look at this Nationwide CareMatters II policy and see how it will benefit your long term care planning needs.
The new Nationwide CareMatters II policy is still not approved in CA. And it will not be available in NY. At least not how it is designed in 48 other states. If you live in CA, I would suggest being patient. Certainly do not rush into buying the older CareMatters policy. If you live in NY, each and every hybrid policy option is awful. If you are a New Yorker, call me at (800) 891-5824 and I will help you to get better available policies.
Nationwide Care Matters II - Life Insurance Linked With Long Term Care Insurance
Nationwide CareMatters is one of many "linked-benefit" LTC policies in the marketplace today. These policies are also referred to as "asset-based long term care insurance," and probably most commonly "hybrid" long term care insurance policies.
Unlike a traditional LTC policy, a hybrid long term care policy offers you more than just long term care insurance. Hybrid LTC policies link long term care insurance benefits to a death benefit that will typically be a greater value to you than your premiums paid. This means that a benefit will be paid to you whether you need long term care services or not.
Linked Benefit LTC Policy - Your benefits are available to you whether you Live, Die or Quit.
- LTC insurance benefits - the amount you receive each month to pay for your LTC needs
- Life insurance benefit - Your life insurance benefit preserves your asset for your beneficiaries if long term care is not needed
- Return of Premium benefit - If you change, your mind you can receive a return of your premium subject to the surrender value.
Additionally, unlike traditional LTC policies your premiums are guaranteed and will never increase.
Nationwide CareMatters II Cash Indemnity Benefits - How Are Benefits Paid?
LTC insurance policies pay your benefits to you in 1 of 2 ways: reimbursement or indemnity.
The standard way long term care insurance policies pay benefits is through reimbursement of costs incurred.
Reimbursement LTC policies will only cover your specific expenses for long term care services that qualify under your contract. In addition, you are required to submit monthly receipts and bills for reimbursement. If your bills and receipts are less than your monthly maximum benefit, you will only be reimbursed up to the amount of your receipts.
Cash indemnity long term care insurance polices by contrast will pay out your full monthly maximum benefit to you with no restrictions on how your money is used. Once your claim is approved, you are not required to submit monthly bills and receipts.
- Bills and Receipts submitted monthly
- Each month, you must wait and see which services are covered
- Services not covered will be out-of-pocket expenses for you
Cash Indemnity Policies
- Bills and receipts not required
- 100% of your monthly LTC benefit available every month
- No restrictions on how you spend your benefits
- Unused monthly benefits can be saved in your personal bank account for future needs
So, the indemnity model that Nationwide offers you gives you the flexibility, freedom and control to spend your benefits however you want.
This flexibility might be helpful for you to insure that if you need informal care, possibly provided through family or friends, you will be able to cover their costs.
Additionally you would be able to spend your benefit dollars on other incidental items that may not be associated with your care needs such as home maintenance or housekeeping needs.
Cash indemnity policies will always provide you with flexibility for your future care needs.
Nationwide CareMatters II - Policy Benefits Options
Okay, so how are your CareMatters II benefits designed?
The choices with CareMatters II is similar to all long term care insurance policies. You will have to select your initial monthly long term care benefit amount , your benefit period (number of years), and your inflation protection factor.
Or, you could reverse engineer it and select your premium to derive at your benefits.
30 - 75
LTC Benefit Period Options
2-7 years; acceleration of life insurance specified amount is 24 months with all benefit periods (7 year benefit period might now be appealing)
Inflation Protection Options
3% simple, 3% compound, 5% compound, US Medical Care Inflation
90 Calendar Days; Upon completion, benefits for the first 90 days will be paid retroactively
Return of Premium Options
Maximum LTC Benefit, One Time Step-Up, Vested
Residual Death Benefit
20% of the specified amount of life insurance (industry leading)
Single Pay, 5 Pay, 10 Pay, Pay to Age 65, Pay to Age 100
Okay, so here are some quick thoughts about the new offering.
What I Initially Like About The New CareMatters Policy
The enhancements with CareMatters II that I certainly like are the addition of the 3% compound inflation protection option (much needed!), the availability of the policy for ages 30-39; the payment options to either age 65 or 100; and the 90 day elimination period retroactive refund of benefits.
What I Don't Initially Like About The New CareMatters II Policy
Well, one component I initially do not like is the Maximum LTC Benefit will only return cash surrender value. There is a massive loss of premium should you change your mind and cancel your policy, especially for women. I usually will always select maximum LTC options for my clients, however the sacrifice of the cash surrender value with this CareMatters II policy to maximize your LTC benefits is somewhat high compared to competitor policies.
I realize the story is "nobody ever cancels" but still....
You might like the comfort in knowing you could change your mind and request your premium back.
We are definitely seeing a trend in the marketplace with reducing the Return of Premium values on the newly issued products. OneAmerica and Lincoln have also moved in this direction.
I have only had one request to cash surrender a hybrid policy in 23 years.
What I Am Unsure About With The New CareMatters II Policy
For inflation protection, I am unsure about whether it will be wise to use the US Medical Care option in place of the guaranteed 3% compound option. Nationwide will allow you to select either of these two inflation protection options for the same price.
I could see this US Medical Care option being over-marketed to you, especially with the Nationwide illustration software cherry picking its historical data to begin in 1988 when the medical care CPI component resulted in annual increases much higher than medical CPI in the past 10 years.
Since 2013, the medical care CPI is at 2.41%.
Of these 2 inflation protection options, I would recommend using the known quantity of guaranteed 3% compound to be safe.
Nationwide Care Matters II Cost Review
Okay, so if you are like most of my clients what you really want to know is how does this new Nationwide CareMatters policy compare with the other hybrid long term care insurance policies in the marketplace. Is Nationwide CareMatters II a good policy for you to consider? Is it priced reasonably for you? Or can you find better values elsewhere.
Today, we have a half-dozen or so hybrid long term care policies available to you. A few of the leading hybrid long term care insurance policies are the Securian SecureCare policy, the OneAmerica Asset Care policy, the Lincoln Moneyguard III policy.
It will be difficult to directly compare the OneAmerica Asset Care policy to the Nationwide CareMatters II policy.
OneAmerica offers you Lifetime unlimited LTC benefits, and OneAmerica Asset Care can also be issued to couples on a joint life basis; Nationwide will only offers you limited benefit period choices of 2-7 years and CareMatters II is sold as individual policies only. These policies are apples and oranges.
To keep your research simple for now, let's only compare apples.
Nationwide CareMatters II will be easily compared to Lincoln Moneyguard III and Securian SecureCare.
Each of these 3 hybrid long term care insurance policies are issued to individuals only, with limited benefit periods.
Lincoln Moneyguard III is a reimbursement long term care policy.
Securian SecureCare and Nationwide CareMatters II are 100% cash indemnity policies.
In particular, the Securian SecureCare cash policy also has very strong pricing today, so it will be very interesting to see how Nationwide's new Care Matters II pricing will compare with the Securian policy.
It will be particularly interesting to see which is the better cash indemnity LTC policy value, Securian SecureCare or Nationwide Care Matters!
Let's look at a case study of a 60 years old married couple residing in Columbus, Ohio. Nationwide's home town.
For the purposes of this case study, Let's look at an equal premium deposit with each company of $100,000 per insured.
We will compare 6 year benefit periods with all companies, and 3% compound inflation protection.
|Age 60||Age 80||Age 65 Return of Premium|
|Nationwide Max LTC||$4987 Mo.||$9007 Mo.||$57,679|
|Nationwide Vested||$3964 Mo.||$7159 Mo.||$100,000|
|Securian Vested||$4813 Mo.||$8692 Mo.||$100,000|
|Lincoln Max LTC||$4149 Mo.||$7494 Mo.||$70,000|
The complete illustrations for these insurance policies are below.
So, what are the takeaways for you.
The numbers are very close with Nationwide (Max LTC) and the Securian policies if you solve for maximum LTC beneifts with each company.
Lincoln Moneyguard III is not priced well today.
The Securian SecureCare policy and the Nationwide CareMatters II policy with Max LTC option have much better pricing than Lincoln Moneyguard and each are cash indemnity policies, receipts are not required.
If you seek the flexibility of cash benefits for your informal home care needs, either the Securian policy or the Nationwide policy with max LTC benefits are great options for you.
The vested 100% Return of Premium option with Nationwide is 21 % more expensive than the Securian SecureCare vested indemnity policy.
If you feel the Return of Premium benefit is somewhat important to you, select the Securian SecureCare policy.
If you do not care about the Return of Premium benefit, select the Nationwide Care Matters II policy. With Nationwide, you will obtain a few perks that the Securian SecureCare policy does not provide you: the elimination period retroactive benefits refund of your initial 90 days of claims, and possibly the slightly higher residual death benefit if you completely exhaust your life insurance coverage.
Now let's take a look at the numbers for 60 year old married females.
Same parameters as above: $100,000 Single Pay premium, 6 year benefit periods, 3% compound inflation protection.
|Age 60||Age 80||Age 65 Return of Premium|
|Nationwide Max LTC||$4405 Mo.||$7955 Mo.||$44,132|
|Nationwide Vested||$3482 Mo.||$6288 Mo.||$100,000|
|Securian Vested||$4266 Mo.||$7705 Mo.||$100,000|
|Lincoln Max LTC||$3529 Mo.||$6373 Mo.||$70,000|
The complete illustration files are below.
Okay, so what are the takeaways for you if you are a 60 year old married female?
Well, your results as a 60 year old female are the same as above for the married male age 60. Securian and Nationwide are very close in price if you solve for maximum LTC benefits, minimum return of premium option with Nationwide.
The vested Return of Premium option with Nationwide CareMatters II is 22% more expensive than the Securian SecureCare vested return of premium option.
This vested Return of Premium option certainly does not win for male or female applicants for Nationwide with single pay pricing.
To maximize benefits with the Nationwide CareMatters II policy you will once again have to be comfortable with the cash surrender value.
So, the Securian SecureCare policy may be your best option if you are female and you want cash indemnity. And you also want the security of knowing you can receive your money back if your needs change.
The Nationwide Max LTC policy however provides greater LTC benefits than Securian, and Nationwide will also provide you with the retroactive refund of 3 months of benefits once your 90 day elimination period is satisfied and the higher 20% residual death benefit.
You could certainly make a case for both the Nationwide CareMatters II and SecurianSecureCare policies as your best option.
Please also understand that health underwriting can be different with these companies depending upon your health history.
Nationwide CareMatters II Rating and Conclusions
So, the new Nationwide CareMatters II policy is a very strong addition to the hybrid long term care insurance arena. Whereas its predecessor, the original Your Life CareMatters policy was wholly non-competitive and never in the conversation with my clients and I, the new Nationwide Care Matters II policy will certainly thrust itself immediately into our future conversations.
Aside from its obvious indemnity story, the Nationwide CareMatters II policy has additional excellent features I like.
CareMatters II will retroactively refund policyholders for their outlay of expenses during the 90 day elimination period.
CareMatters II will offer you long term care support services through its Nationwide Care Guide Network, its resource and referral service.
CareMatters II has an industry leading residual life insurance benefit equal to 20% of the specified amount of life insurance.
These are excellent features with this policy.
The only possible downside to the Nationwide CareMatters II policy is in the cash surrender values with its design to maximize your long term care benefits.
I understand more than anyone that very few people cancel their long term care policies, however.
I have written as many asset based long term care insurance policies as any agent in the country. Everyone tends to keep their policies. Still, I view the the Return of Premium benefit in hybrid long term care insurance policies like I view the popularity of SUVs. You may never take your SUV off road, however you may like the idea that if you need to take your SUV off road, you have the ability to do so.
Likewise with the Return of Premium cash surrender value with your long term care policy. You may feel you will never change your mind and cancel your long term care insurance policy. However, you still may like the idea that if you did change your mind and ask for your money back you could do so without a substantial loss.
The trend in the hybrid arena is moving in the direction away from the 100% vested return of premium options, however.
That said, this Nationwide LTC policy will still absolutely be in your discussion and will be a great fit for you in the right situation depending upon your age, health and marital status. (Nationwide is best priced overall for younger, married applicants). Nationwide also has excellent Multi-Pay pricing such as 5 Pay and 10 Pay Plans.
Nationwide CareMatters II will issue coverage to younger ages starting at age 30. Most policies only issue coverage at age 40.
Nationwide CareMatters II has very competitive pricing at the younger ages, too.
Nationwide CareMatters II will offer Pay to Age 100 premium schedules which might be helpful for you. The only other linked benefit asset-based LTC policy that will offer you a Pay to 100 option is OneAmerica Asset Care.
Nationwide Care Matters II will also provide you with the option choose to link your inflation protection to the US Medical Care component of the Consumer Price Index rather than buying a guaranteed level of inflation protection. You may be comfortable and attracted to this option and feel it is worth the downside risk of diluting your inflation coverage to possibly have some upside potential.
So, this Nationwide CareMatters II policy will definitely be an option for you to strongly consider. Undoubtedly it will be on a very short list of your best policy options.
Also, it is important to keep in mind that underwriters have different underwriting guidelines. You may find yourself in a situation where due to your medical history you need to submit your application to 2-3 underwriters. So, it is always helpful for you to have multiple good policy options to consider.
The costs above are for 60 year old married individuals. Keep in mind that your premiums are based upon age, gender, and marital status.
The results will certainly change for you depending upon your specifics.
So, my conclusion is the Nationwide CareMatters II policy is a strong welcome addition to your options. You may or may not feel it is your very best option when you review your specific results, however you should at the very least review NationwideCareMatters II as a strong possibility for you. This policy will absolutely be on your short list!
Get Customized Hybrid Long Term Care Insurance Illustrations
I work with the leading hybrid LTC insurance underwriters including Lincoln Moneyguard, OneAmerica Asset Care, Securian SecureCare, Nationwide CareMatters, Pacific Life Premier Care, and Global Atlantic ForeCare.
To receive your customized hybrid long term care insurance illustrations, analysis and advice, please call me at (800) 891-5824. Or submit your online request through my website. I look forward to working together.