Review of New York Life long term care insurance NYL Secure Care AARP
NYL Secure Care is the repriced long term care insurance policy underwritten by New York Life introduced April 2016.
Concurrent with the launch of NYL Secure Care this year, New York Life has also entered into a marketing agreement with AARP to market its Long-Term Care Options program to AARP's 37 million members.
The AARP Long Term Care Options program includes not only the NYL Secure Care policy which is a traditional long term care insurance product but also the New York Life Asset Preserver product, a hybrid whole life insurance policy with a long term care rider.
Through this program, AARP will refer its members to New York Life agents who will market and sell New York Life insurance policies.
Unfortunately for AARP members, this marketing agreement will not benefit them. As you will see below, the NYL Secure Care long term care insurance policy is the most expensive long term care insurance policy currently in the marketplace in 2016. By far.
New York Life Long Term Care Insurance NYL Secure Care benefit options
Long term care insurance will reimburse you for your care expenses, whether you receive your care at home or in a facility. Long term care insurance will enable you to pay for quality care as well as provide you with access to a wide range of caregiver options. It will help you to protect your retirement income and assets, and will play a significant role in your retirement planning.
The NYL Secure Care policy has 5 core components to design the policy. Your premium will directly relate to your level of coverage chosen within these 5 categories.
1. Facility services daily maximum benefit (FMDB). This is the maximum amount of money reimbursed for facility care each day you are on claim following the waiting period. NYL Secure Care offers facility daily benefit ranging between $50-$400.
2. Benefit period. The benefit period is the minimum length of time benefits will be paid to you. NYL Secure Care offers benefit period choices of 2 years, 3 years, 5 years and 7 years.
3. Home and community based care (HMDB) maximum daily benefit. This is the amount of money that you will have available to you for care at home. It is a percentage of your nursing home benefit. NYL Secure Care offers 50%, 80%, and 100%.
4. Waiting period. This is your deductible. It is the number of days care must be covered and paid for by you. NYL Secure Care offers 90 day, 180 days and 365 days as options.
5. Inflation protection. This option is critically important. It will allow your policy to retain its value over time. NYL Secure Care offers 4 automatic inflation protection choices of 5% compound, 3% compound, 3% Simple, Consumer Price Index (CPI-U) Automatic, and 1 purchase option choice Consumer Price Index (CPI-U) Offer.
Comparing New York Life NYL Secure Care rates with the long term care insurance marketplace
New York Life has 3 health underwriting categories: Preferred, Select Standard, and Standard. Most applicants will be placed in the "Preferred" category.
Applicants that do not qualify for the "Preferred" health classification will be limited to the reduced benefits New York Life will allow to be purchased.
Applicants that are placed in the Select Standard or Standard classifications will be limited to 3 year benefit periods, $150.00 day, and 80% home care benefits. The Select Standard and the Standard categories are for "sub-standard" health applicants. Select Standard health classification offers will cost you 44% more premium. Standard health classification offers will cost you 92% more premium.
With this current New York Life long term care insurance pricing being as high as it is, I expect most applications will be funneled to the "Preferred" category.
The NYL Secure Care rates are 2X higher then the leading long term care insurance underwriters, so I can't envision adding a 44% load or a 92 % load to these rates and also limiting your benefits to $150.00 day and 3 year benefit periods and 80% Home Care simply because you might have a medical condition.
For the purposes of examining rates, let's look at a 60 year old married Florida couple.
Benefits of $150.00 day, 3 year benefit periods, 90 day waiting period and automatic 3% compound inflation protection.
We will assume the applicants health qualify for best available health classification with all underwriters.
60 year old married female. $150.00, 3 year benefit period, $164,250 Pool of Money, 3% compound, 90 day EP.
Mass Mutual $150.34 month
Genworth $171.87 month
LifeSecure $180.97 month (2.8 years)
Mutual of Omaha $251.38 month
Northwestern Mutual $288.99 month
New York Life NYL Secure Care $387.44 month
60 year old married male. $150.00, 3 year benefit period, $164,250 pool of Money, 3% compound, 90 day EP.
LifeSecure $110.33 month (2.8 years)
Northwestern Mutual $149.77 month
Mass Mutual $150.34 month
Mutual of Omaha $153.59 month
Genworth $171.87 month
New York Life NYL Secure Care $258.10 month
Combined rates, 60 year old married couple, Florida residents. Best health category
$150.00 day, 3 year benefit periods, $164,250 Pools of Money, 3% compound inflation, 90 day EP.
LifeSecure $291.30 month (Not rated AM Best)
Mass Mutual $300.68 month (A++ AM Best)
Genworth $343.74 month (B++ AM Best)
Mutual of Omaha $404.97 month (A+ AM Best)
Northwestern Mutual $438.76 month (A++ AM Best)
New York Life NYL Secure Care $645.54 month (A++ AM Best)
Now, let's take a look at premiums for a married Texas couple, age 55 with the election of long term care insurance benefits that provide stronger coverage than the above.
$200.00 day, 5 year benefit periods, $365,000 Pool of Money, 3% compound inflation protection, 90 day waiting period.
Married Texas couple age 55 combined monthly premiums
Genworth $370.30 month (B++ AM Best)
Mass Mutual $424.60 month (A++ AM Best)
Mutual of Omaha $457.47 month (A+ AM Best)
Thrivent $586.86 month (A++ AM Best)
State Farm $646.00 month (A++ AM Best)
Northwestern Mutual 777.94 month (A++ AM Best)
New York Life NYL Secure Care $1042.58 month (A++ AM Best)
As you can see from the above rates, the New York Life NYL Secure Care policy is significantly more expensive than each and every other long term care insurance policy available in the marketplace.
What is interesting and stands out is comparing the New York Life LTC insurance premiums to the Mass Mutual long term care insurance rates,
Mass Mutual and New York Life are comparable mutual life insurance companies.
Mass Mutual and New York Life are each rated A++ by AM Best.
Each company offer dividends on their respective long term care insurance policies to reduce future premium outlay.
The Mass Mutual rates are very attractive for both men and women.
The New York Life NYL Secure Care rates are not attractive whatsoever.
If you are a 55 year old healthy married couple living in Dallas, Texas would you pay $13,000 a year for a policy that you can purchase for $5000 year? Would you pay $7000 a year for a policy you can buy for $3500? I sure hope you would not.
So, this begs the question: How will New York Life and AARP attempt to sell this NYL Secure Care long term care insurance policy to you ?!
NYL Secure Care is so expensive - How will New York Life and AARP sell this long term care insurance policy?
Please be aware that agents of New York Life are employees of New York Life and have no choice but to sell this policy or other NY Life policies o earn their living. I actually submitted an inquiry to AARP to see how a New York Life agent would sell this policy to me. Not surprisingly the agent misrepresented and lied about every competitor policy and the agent repeatedly tried to overstate AARP's "endorsement." The NY Life agent told me that many competitor policies are outrageously priced however once I illustrated to him in writing the filed insurance rates that showed him New York Life is the most expensive policy in the United States ....well, not surprisingly he stopped contacting me.
You have a choice as to whether or not you feel this policy has value to you compared to other policy values. (Rest assured, it has zero value)
That being said, this is how I feel a NY Life agent might attempt to make its policy seem "affordable" to you.
Long term care insurance premiums are comprised of the daily benefit, the benefit period, the waiting period and the inflation protection option.
For a New York Life agent to sell this policy to you as a consumer, if we assume you are somewhat sharp and will most likely get a second opinion or a comparative quote, the New York Life agent will have to eliminate or reduce your benefits somewhere. Otherwise the New York Life agent knows that your premium with New York Life will be twice as expensive as other competing long term care insurance policies and you are likely to buy your coverage elsewhere. And if the New York Life agent is not yet aware that its policy is priced outrageously high the New York Life agent will soon become aware of this fact. Insurance agents do talk to one another and captive employee agents do become aware when they can not compete on price.
Thankfully I am not a captive agent employee of one company and do not have this dilemma. In reviewing the New York Life rates and with my understanding of the shenanigans some insurance agents will pull to sell policies it is clear to me the approach that the New York Life agents will take (or might be trained to take) as part of the sales process.
I believe the New York Life agents will attempt to sell this policy to you without including AUTOMATIC compound inflation protection in your plan. The inflation protection component is the only core component that you as a consumer might have difficulty in understanding and also might not notice if it this benefit is absent, especially if you are shopping around for your best price. Also, the inflation protection terminology is such that you might believe you have automatic inflation protection in your quote when in fact you do not.
NYL Secure Care inflation protection options ranking from best to worst.
- 5% Compound Auto
- 3% Compound Auto
- CPI Auto
- 3% Simple Auto
- CPI Offer Purchase Option
The easiest opportunity to reduce your premium to the point where you might actually unwittingly buy this policy is for the agent to send you an illustration without automatic inflation protection, and instead to not include any inflation protection or (a little craftier) simply sell you a policy with a "purchase option" to buy more coverage and pay more premium to New York Life in the future.
The New York Life purchase option is called "CPI Offer."
Purchase options to address inflation protection may easily be misunderstood by you as a consumer. The option to buy more coverage will increase your premium with every option that you exercise. You will be buying an increasing premium long term care policy.
In contrast to purchase options, automatic inflation protection provides you with level premiums, while your benefits increase every year automatically.
To allow you to see the impact of eliminating automatic inflation protection will have on the NYL Secure Care premium let's re-visit our 60 year old married Florida couple example above.
$150.00 daily benefit, 3 year benefit period, 90 day waiting period.
Combined 60 year old couple premiums, healthy
NYL Secure Care no inflation $280.31 month (in comparison, Mass Mutual is only $170.56 month)
NYL Secure Care CPI Offer $310.21 month
NYL Secure Care CPI Auto $615.11 month
NYL Secure Care 3% compound auto $645.54 month (in comparison Mass Mutual is only $300.68 month)
Do you see how the "no inflation" and the "CPI Offer" premiums are in the same "$300 month range" as Mass Mutual's policy that will include 3% automatic compound inflation protection?
You might very easily make the mistake of confusing "CPI Offer"with "3% Compound" and not realize the differences between the benefits provided to you by these options are night and day.
Do not confuse a "CPI Offer" to buy future benefits as automatic inflation protection!
The "CPI offer" is just an offer by New York Life to sell you more long term care daily benefit in the future based upon the consumer price index. The cost of your future purchase will be based upon your new age at the time of your purchase. If you continue to buy additional benefits to keep pace with inflation, you will inevitably have to pay the premiums and more that you see above for including the automatic inflation option. You either will pay New York Life now or you will pay New York Life later. There will be no free lunch.
Also, without including automatic inflation protection, your long term care insurance policy will not qualify for your State Long Term Care Partnership programs for Medicaid asset disregard benefits.
NYL Secure Care underwriting and reduced long term care insurance benefits
One additional issue that needs to be addressed is the underwriting guidelines under this NYL Secure Care policy. For all applicants that do not qualify for its "Preferred" category New York Life will limit your benefits to $150.00 day, 3 year benefit period, and your home care benefit will be a maximum of 80% of your facility daily benefit. These limited benefits will be reserved for sub-standard risk applicants.
The sub-standard categories are called "Select Standard" and "Standard." There will be additional premium of 44% and 92% charged for applicants within these categories.
With this knowledge, it will be interesting to see if New York Life agents are trained or inclined to "steer" you to benefits of $150.00 day and 3 year benefit periods, and suggest to you that this amount of long term care coverage is all that you need. Knowing that medical records could produce a sub-standard offer the New York agents may not wish to have a future conversation regarding a reduced benefit offer after underwriting is completed. It would not surprise me if the New York Life agents will be trained to suggest benefits of a $150.00 daily benefit and a 3 year benefit period.
Possible dividends from New York Life
New York Life is a mutual life insurance company. As a mutual company, the policyholders of NYL Secure Care will become dividend eligible in year 11. The dividends may reduce your premium. Dividends are not guaranteed.
Traditional long term care insurance premiums are not guaranteed and may be increased by the insurance company.
New York Life has requested and received rate increases on prior long term care insurance policy series New York Life has underwritten.
A few notable insurers such as Mass Mutual have never once requested rate increases on any long term care insurance policy they have underwritten in any state.
NY Life NYL Secure Care Conclusions
While New York Life has strong financial ratings, the premiums for this NYL Secure Care long term care insurance policy are stunningly high to say the least. Financial ratings alone can not justify these rates. New York Life introduced this policy in April 2016 at the same time it announced its relationship with AARP.
AARP receives compensation from New York Life payable to AARP Services Inc., a taxable subsidiary of AARP. Many people assume AARP does not make money from "endorsing" insurance products. This is not further from the truth. AARP and New York Life are in a mutually beneficial financial arrangement.
In the past, AARP "endorsed" reasonably priced long term care policies underwritten by Met Life and Genworth. Today AARP is "endorsing" a long term care insurance policy that is not even remotely competitive which is problematic due to the sheer size of AARP membership.
As part of their sales process, the New York Life agents will attempt to have you believe this AARP endorsement means something positive (it means zilch). Unfortunately, AARP members may "trust" this endorsement and this is the greatest shame of this marketing arrangement. Of course if AARP should ever be called to the carpet on this expensive policy AARP may state that it is just endorsing the company New York Life and the wide range of "Long Term Care Options" the New York Life agent may wish to discuss, whether it is this NYL Secure Care traditional LTC policy, the New York Life Asset Preserver hybrid whole life policy with LTC rider, New York Life annuities, or any other insurance planning product.
Unfortunately, this long term care insurance policy New York Life and AARP are pitching to the public is an awful value for consumers today. There are too many other highly regarded policies at much lower premiums for consumers to ignore.
Unfortunately, your New York Life agent will never tell you much better long term care insurance options exist with numerous underwriters.
Receive unbiased and objective long term care insurance advice
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Jack Lenenberg, President LTC Partner