In this example, assume the client’s birthday is in February, they have a Long Term Care (LTC) policy with a monthly premium of $2000 ($24000/year) and a 90-day elimination period. Within Income InSight, when a LTC stress test is applied, additional assumptions are made. Income InSight modeling assumes $4,000 per month in LTC expenses, inflated at 5% per year, for 48 months prior to passing at the life expectancy in the model.
Here, the client turns 76 in 2052. Therefore, $2000/month was paid in premiums for the months between January and April, for a total of $8000. This reflects the payment of premium prior to 76 and during the 90-day elimination period. The waiver of premium impact is after LTC benefits started paying in May.