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Long Term Care Blog

Mass Mutual CareChoice Select Review - F is for Failure

by Jack Lenenberg

Mass Mutual Care Choice

MassMutual introduced its CareChoice policy series to help you prepare for your future long term care needs.

The Mass Mutual CareChoice policy series offers two payment options:  CareChoice One is a single premium whole life policy with long term care riders.  CareChoice Select is a limited pay (12 years) level premium whole life policy with long term care riders. I have previously reviewed the CareChoice One single pay option.  This review is for the CareChoice Select 12 Pay option.

What is MassMutual CareChoice Select?

Mass Mutual CareChoice Select is a hybrid whole life and long term care insurance policy.  Hybrid long term care policies provide a combination of guaranteed benefits that include:

  • A pool of income tax-free LTC benefits that can help you to pay for your long term care expenses on a monthly basis
  • The payment of an income tax-free death benefit if long term care is never needed
  • The option for you to cancel the policy at any point for the cash surrender value if you change your mind

MassMutual CareChoice Select has guaranteed level premiums over 12 years.

MassMutual CareChoice One has an LTC benefit Pool that will be available to pay monthly LTC benefits to you once your 90 day elimination period is satisfied.

MassMutual CareChoice Select has two LTC Riders that will pay out your monthly LTC benefits to you:

  • Accelerated Death Benefit For Qualified LTC Insurance Rider
  • Extended LTC Benefits Rider

MassMutual CareChoice Select is a participating whole life policy and is therefore eligible to receive dividends, which are not guaranteed. Your dividends may be used to purchase additional whole life insurance, which can increase your death benefit, your LTC benefit pool, and your cash surrender value.

How MassMutual CareChoice Select Works

Hybrid long term care policies provide a death benefit, a long term care pool of money, and a cash surrender value all of which are guaranteed.

When you need long term care, your death benefit is first paid out to you on a monthly basis through the Accelerated Death Benefit Rider.

Your death benefit is reduced dollar-for-dollar by LTC claims paid out.  

Once your death benefit is reduced to zero, the Extended LTC Benefits Rider continues to provide long term care benefits to you until your extended LTC benefit pool is exhausted entirely.

CareChoice Select is designed to pay LTC benefits to you for a minimum period of 4 years.

Your death benefit will initially be accelerated to you on a monthly basis over 2 years through the Accelerated LTC Rider.

Your Extended LTC Benefits Rider will continue to pay LTC benefits to you for an additional 2 years once your death benefit is exhausted.

Lastly, if your policy's non-guaranteed dividends are used by you to purchase paid-up additions, LTC benefits may be continued to be paid out to you past the 48 months total benefit period.  If you are fortunate to receive non-guaranteed dividends, when you are much older you may receive 5 years of benefits instead of 4 years, for example.  Your non-guaranteed dividends will only extend your benefit period.  Your dividends will not be used to increase your monthly LTC benefits. (view your customized illustration for details)

Your long term care insurance benefits will be payable to you once you satisfy your eligibility requirements.  To be eligible to receive long term care benefits, Mass Mutual will require you to be certified as being Chronically Ill.

Chronically Ill means that a licensed healthcare practitioner must certify in writing that you cannot perform, without substantial assistance, at least 2 of 6 activities of daily living due to loss of functional capacity; or that you have a severe cognitive impairment, such as Alzheimer's disease or dementia.  Your need for care must be expected to last for at least 90 days. This language is standard with all long term care insurance contracts.

Elimination Period:  90 Days:  With Mass Mutual CareChoice Select, long term care insurance benefits are not payable during the initial 90 days once you are certified as being Chronically Ill and you are receiving Covered Services under the contract.  (Many contracts have elimination periods, although some LTC contracts in the marketplace will pay benefits to you from Day 1.)

Reimbursement Contract:  MassMutual CareChoice Select is a reimbursement contract.  With reimbursement contracts you are required to submit receipts and proof of loss forms for expenses incurred for covered long term care services under the contract. (For the ultimate flexibility you might want to consider a cash indemnity hybrid policy which would not require you to incur expenses or submit receipts for reimbursement)

Inflation Protection: Mass Mutual does have optional inflation protection that you can consider.  Through the election of this option, the LTC Riders will increase your maximum monthly LTC benefit and LTC pool by 5% compounded annually.  If you choose Inflation Protection, your monthly benefit and LTC Benefit pool through Age 85 will be lower than if you had not selected inflation protection.  Due to the fact that it will take until you are 85 years old before the purchase of Inflation Protection will yield value for you, MassMutual CareChoice policy contracts are rarely designed to include any inflation protection. (Huge MassMutual CareChoice policy weakness)

Is MassMutual CareChoice Select Right For You?

MassMutual CareChoice Select was introduced by MassMutual as a Limited Payment option to its CareChoiceOne policy which only accepts single premiums.  

Limited Pay options are very popular today because they can afford you the ability to obtain your coverage today, while budgeting your premiums over a fixed number of years.  The typical Limited Pay options that are available in the marketplace through other policies are 5 Years, 7 Years, 10 Years or 15 Years.

Mass Mutual CareChoice Select has only one payment schedule option available for you:  12 Years.  Interesting choice. 

So, I am sure you are interested in knowing whether Mass Mutual CareChoice Select is a policy you should purchase.

Let's take a look at a few policy comparisons to see whether this policy merits your consideration as a hybrid long term care insurance option.

To keep things simple, we will illustrate an annual premium of $10,000 year with Mass Mutual CareChoice Select for 12 years ($120,000 total premium) to review the long term care benefits you will receive.  If you deposit $7000 year, your benefits will be 70% of what is illustrated.

Please understand that your premiums and benefits have a linear, pro rata relationship with all policies. If you deposit premium of $6000 year instead of $10,000 year, your benefits will be 60% of the benefits that are illustrated for the annual premium of $10,000.

Let's review the MassMutual CareChoice Select benefits for 55 year old men and women; and 65 year old men and women.

To help you understand if the MassMutual CareChoice Select is a reasonable policy, let's directly compare MassMutual with the hybrid long term care policy available through Nationwide Financial.  The Nationwide CareMatters II policy is a cash indemnity policy.  With Nationwide you will not be required to submit receipts for reimbursement as you will be required to with Mass Mutual CareChoice Select.  Also, Nationwide CareMatters II will cover the cost of your care for your 90 day elimination period.  So, you will also avoid the deductible expense with the CareMatters II policy.

Nationwide CareMatters II offers a 10 Pay option, so let's compare a Nationwide design with premium of $12,000 over 10 years ($120,000 total) to Mass Mutual $10,000 over 12 years ($120,000 total).  This will be as close as we can get.  I would not be surprised if MassMutual marketing selected a 12 Pay for CareChoice Select because the other underwriters offer 10 Pays.  Possibly Mass Mutual marketing incorrectly thinks it could avoid a comparison.  WRONG :) 

Male Age 55, $120,000 Cumulative Premium: $10,000 year 12 Pay Mass Mutual; $12,000 year 10 Pay with Nationwide. 

Nationwide offers discounts for married or partnered applicants.  MassMutual does not offer discounts.  Like most policies, Nationwide CareMatters policy is best designed with automatic inflation protection for 55 year old applicants.  We will use 3% compound inflation protection with Nationwide as an example.  Nationwide offers benefit periods up to 7 years.  We will use 6 years as an example.  With MassMutual we will be overly generous and assume all non-guaranteed dividends at current dividend scale are paid out to help you receive greater than 4 years of benefits.

Mass Mutual vs Nationwide Male age 55
MassMutual Nationwide Married Nationwide Single
Age 55 LTC $6185 mo $5644 mo $4901 mo
Age 55 Pool $296,868 $438,060 $380,394
Age 75 LTC $6185 mo $10,193 mo $8851 mo
Age 75 Pool $396,915 $791,185 $687,033
Age 85 LTC $6185 mo $13,698 mo $11,895 mo
Age 85 Pool $452,507 $1,063,286 $923,815

Oh my.  If you are a male age 55, and are interested in a limited pay plan, you might not want to buy a MassMutual policy.  

For the same cumulative premium you can obtain a policy through Nationwide that will provide you with significantly greater LTC benefits.

Nationwide will provide you with automatic inflation protection to grow your LTC benefits to twice the MassMutual LTC benefits available to you.  If you are married, at age 80 you will have $12,000 monthly LTC benefit and a $1,000,000 LTC pool with Nationwide.  MassMutual will give you 46000 month and $400,000.  This is just not a fair fight.

Additionally, Nationwide is your more flexible LTC policy, with cash indemnity benefits (Mass mutual is reimbursement); and Nationwide will cover the cost of your care for the initial 90 day elimination period too.  The only advantage Mass Mutual has is that you death benefit ill be higher if you do not need care.  Your guaranteed death benefit with Mass Mutual is $148,434.  Your guaranteed death benefit with this Nationwide policy will be equal to your premium paid over 10 years, $120,000.  If you are like most of my clients you are buying your policies for the LTC benefits, not for the death benefit.  Certainly you would trade $28,000 of death benefit for greater than $600,000 of cash indemnity LTC benefits in the future.  Everyone would.

Nationwide illustration

MassMutual illustration

Let's now take a look at the comparison numbers for 55 year old females. Same parameters.  Assume MassMutual pays you every single penny of its non-guaranteed dividends at current scale  (Yes, I know it won't happen, but I am in a generous mood).  6 year benefit period with Nationwide, and automatic 3% compound inflation with Nationwide.

Female Age 55, $120,000 Cumulative Premium: $10,000 year 12 Pay Mass Mutual; $12,000 year 10 Pay with Nationwide. 

MassMutual vs Nationwide Female age 55
MassMutual Nationwide Married Nationwide Single
Age 55 LTC $5789 mo $5181 mo $4602 mo
Age 55 Pool $277,892 $402,170 $357,201 
Age 75 LTC $5789 mo $9358 mo $8311 mo
Age 75 Pool $370,072 $726,354 $645,145
Age 85 LTC $5789 mo $12,576 mo $11,170 mo
Age 85 Pool $421,186 $976,173 $867,021

Well, different gender, but same story as above.

Nationwide CareMatters II will provide you with twice as much future long term care coverage for the same premium outlay.

And you will have cash indemnity benefits.  And you will receive benefits for the 90 day elimination period.

If you are female and you are in your middle 50's, you will have to be asleep at the wheel to apply to MassMutual for its CareChoice Select policy.

The Nationwide CareMatters II policy benefits just absolutely crush the MassMutual CareChoice Select benefits for you. 

Sometimes underwriters are priced better at different ages.  We have presented 55 year old applicant policy benefits comparisons for you.

Nationwide illustration

MassMutual illustration

What if you are a 65 year old instead of a 55 year old?  Well, let's take a look.

Male Age 65, $120,000 Cumulative Premium: $10,000 year 12 Pay Mass Mutual; $12,000 year 10 Pay with Nationwide. 

MassMutual vs Nationwide Male age 65
MassMutual Nationwide married Nationwide single
Age 65 LTC $4336 mo $4488 mo $3845 mo
Age 65 Pool $208,116 $348,357 $298,442
Age 75 LTC $4336 mo $6031 mo $5167 mo
Age 75 Pool $241,196 $468,163 $401,082
Age 85 LTC $4336 mo $8106 mo $6944 mo
Age 85 Pool $289,505 $629,172 $539,020

Look at these numbers.  Just a night and day difference in your long term care insurance benefits with these 2 hybrid LTC policies if you are a 65 year old male.  If you are married, Nationwide CareMatters II will provide you with a higher initial monthly LTC benefit from day 1 and automatic annual 3% compound inflation protection growth on your LTC benefits!  With Nationwide you will have $7000 month, and $542,000 at age 80 guaranteed compared with only $4300 month and $266,000 (non guaranteed) with Mass Mutual.  

And you will have the cash indemnity policy, as well as benefits for the 90 day elimination period with Nationwide too.

With this knowledge, who would ever apply for this Mass Mutual policy?

Nationwide illustration

MassMutual illustration

One more comparison for you - let's look at 65 year old females. same parameters, 6 year benefit period with Nationwide, 3% compound inflation protection with Nationwide; assume all dividends are paid out by MassMutual.

Female Age 65, $120,000 Cumulative Premium: $10,000 year 12 Pay Mass Mutual; $12,000 year 10 Pay with Nationwide. 

MassMutual vs Nationwide Female age 65
MassMutual Nationwide married Nationwide single
Age 65 LTC $4011 mo $3616 mo $3181 mo.
Age 65 Pool $192,548 $280,701 $246,898
Age 75 LTC $4011 mo $4860 mo $4275 mo
Age 75 Pool $222,525 $377,239 $331,810
Age 85 LTC $4011 mo $6531 mo $5745 mo
Age 85 Pool $264,741 $506,978 $445,926

Once again we have the same net result if you are a 65 year old female applicant.  You will receive significantly greater LTC benefits through the Nationwide CareMatters II policy if you are interested in an limited pay installment plan.  This MassMutual CareChoice Select policy limited pay whole life policy is wholly non-competitive.  Of all of the long term care insurance policies I have reviewed over the years, good and bad, this MassMutual CareChoice Select policy might win the title of the worst policy value of all the long term care insurance policies I have reviewed.  

Nationwide illustration

MassMutual illustration

So, who would actually try to sell this MassMutual CareChoice Select policy to you?

Well, funny you should ask that.

A truly independent insurance agent will be hard pressed to ever represent this MassMutual CareChoice Select policy to you.  

There are far too many really good hybrid policy options that are so much better for you if you are working with an independent agent.  Obviously the Nationwide CareMatters II policy is light years better than MassMutual CareChoice Select, but there are other strong hybrid LTC policies as well, many of which I have reviewed extensively within my blog.  So, even if your insurance agent does not work with Nationwide CareMatters II for example, your agent should be able to help you get a better policy through other companies, too.  Securian SecureCare is another cash indemnity hybrid long term care policy with a well-priced 10 pay option, and strong inflation protection options that immediately comes to my mind.

Fidelity InvestmentsI can only think of two specific insurance agents that will ever attempt to sell this MassMutual CareChoice Select policy to you.

1) A MassMutual agent.  Imagine that.  A MassMutual agent wanting to sell you a MassMutual policy. Sometimes your MassMutual agent will try to tell you that he/she is allowed to sell you any policy but that this MassMutual CareChoice policy is your best option.  Blah blah blah.  Hit the ignore button.

Or you might not even realize you are working with a captive MassMutual agent.  Sometimes a captive MassMutual agent will have a business card that says Strategic Financal Partners, or "Capital Financial Group", etc.  However, if you look closely enough on your agent's business card you might see the language Securities offered through registered representatives of MML Investors Services, LLC.  If you see "MML Investors Services" on your agent's business card you are working with a captive MassMutual agent. 

2) A Fidelity Investments employee.  More likely you do not have a relationship with a MassMutual agent, but you do have an investment brokerage account with Fidelity Investments.  If so, Fidelity Investments has contractual relationships with two companies: MassMutual and New York Life.   Fidelity will pitch two hybrid long term care policies to you:  MassMutual CareChoice and/or New York Life Asset Flex.  Neither MassMutual CareChoice or New York Life Asset Flex are competitive hybrid long term care policies in today's marketplace.  Your Fidelity Investments advisor is unlikely to know this, however.  Your Fidelity Investments advisor is just presenting you with the options he/she is told to present.  You might be under the mistaken impression that your financial advisor is held to a higher fiduciary standard and is obliged to find you policies that are in your best interest.  Not so.  Investment advisors do not have a fiduciary duty when it comes to recommending insurance policies.  The standard your advisor has to meet is a very low threshold.  An advisor only has to recommend you an insurance policy is "suitable" for you.  Your financial advisor is under no obligation to find you your best long term care insurance policy. 

That is my job for you.

MassMutual CareChoice Select Review - Summary

The MassMutual CareChoice One (single pay) and CareChoice Select (12 Pay) whole life policies were introduced to help you prepare for your future long term care needs with the life insurance benefit being a secondary consideration for you.  Unfortunately, MassMutual has not designed (or priced) its CareChoice One or CareChoice Select polices with your long term care planning needs in mind. 

You are probably aware that claims for needing long term care services are generally filed by policy owners between the ages of 75 and 90.  If you are looking to properly design your long term care plans while you are in your 50's or 60's you will need to address the risk of inflation.  Your long term care costs will be higher in 25-35 years than your cost of care is today.

MassMutual has priced this CareChoice policy out of any reasonable range for you.  

The optional inflation protection benefit is a non-starter with MassMutual CareChoice Select.

Aarp Hybrid Ltc Ny Life Asset Flex Tiaa Cref Mass Mutual Care Choice OneThe CareChoice policy is purposefully designed with a long term care monthly benefit setback factor with its optional inflation protection such that if you purchase inflation protection you will not see any value until you are 85 years old.  So, MassMutual is funneling every one of its policyowners to buy a policy without any inflation protection.  if this policy was priced OK with out inflation protection, it could be acceptable.  However, CareChoice Select is grossly overpriced without inflation protection, too.  In addition, the CareChoice Select policy only guarantees you with 4 years of long term care benefits. MassMutual CareChoice attempts to illustrate non-guaranteed dividends to possibly provide you with longer than 4 years of coverage. Other competitive policies will guarantee you 6 years, or 7 years, or even Lifetime coverage.  This MassMutual CareChoice Select policy is a lose-lose-lose proposition for you.  You are giving MassMutual a free roll on your money.  Hard pass.  Grade F.

 Find Your Best Long Term Care Policy

I will help you to efficiently and quickly find your best long term care policy.  With 23 years of long term care insurance experience, I know the long term care insurance marketplace inside and out, backwards and forwards.  I work with the leading LTC underwriters such as Mutual of Omaha, Lincoln Moneyguard, OneAmerica, Securian, Nationwide, Pacific Life, Brighthouse, National Guardian, John Hancock, Global Atlantic, Transamerica and more. I have helped thousands of clients and I will help you too.  To receive your personalized illustrations and my customized advice, call me directly at (800) 891-5824.  Or complete the quote request form.  I look forward to helping you.

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