True Group vs. Multi-Life

Size matters.   When we say that about half of the long-term care insurance policies were bought at work, we are talking about a combination of true group and multi-life.  Multi-life generally applies to companies with less than 100 employees but can extend several hundred  What is the difference?

Multi-life LTCI is simply an individual long-term care insurance product offering to employees and their eligible family members with a premium discount and usually simplified underwriting (SI) which means limited health questions or modified guaranteed issue (MGI) which means even fewer health questions. Some carriers will go down to three questions if the employer contributes the premium for even the minimum benefits offered.

True group: Like a group health insurance plan, the employer is the master policyholder of a true group LTC insurance plan and the employees receive certificates of coverage instead of policies. True group plans generally have fewer benefit choices but are guaranteed issue or MGI.

The following chart and addendum will explain each major difference.

  Multi-Life* (Individual) True Group
Eligibility in Addition to Employee More flexible:  spouse/partner; parents; grandparents; siblings; adult children 18+; all respective in-laws Employer can choose to not offer to domestic partners. May or may not be offered to siblings or adult children. Active employees from 17.5 to 30 hours per week.
Underwriting – Voluntary Typically 6-9 questions and participation requirement of 10 employees that can say “no” to the limited questions OR 4% of 200+ groups OR the greater of 15 apps or 10% of employees over age 45 and over $35K salary Guaranteed issue for 500+ with good demographics* (see description at the bottom of this chart); i.e. desirable age, salary & education. GI typically has a 3-6 month pre-existing condition clause. Modified GI (2-5 questions) for smaller companies; no participation requirement OR 5% OR 10% participation. One carrier asks height & weight for MGI.
Underwriting – Employer Contribution Modified Guaranteed Issue down to 3 questions with minimum of 10 employee apps with “no” to the questions with limited benefits such as $4500/$150K/5% compound inflation (full UW above) GI ranges from 10 to 100 and buyups are also GI up to a specific limit
Underwriting – Spouse/Partner Simplified available for working spouses/partners on voluntary basis Simplified available for all spouses/partners plus height & weight
Producer Licensure In each state Only in “situs” state which means the state in which the headquarters is located
Rates No preferred or substandard, but varies based on marital status. Could be two tier (single and married) whether spouse/partner applies or not or could be single, married 1 or married 2. Discounts range from 5%-15% for multi-life and up to 40% for marital Usually blended which means one rate regardless of marital status; no preferred or substandard; the Federal LTCI Program did this to treat everyone equally and true group carriers follow that model. Some carriers customize the rates to the demographics and may issue higher rates than individual products in order to build in a cushion for GI or MGI.
Rate Increases Class rate increase unless there is a rate guarantee in place…options range up to 10 years and some have 3-5 years built in for no extra premium Rate increase would apply to the entire group block; not to the claims experience for one employer. The exception would be a very large group such as a true group plan for the employees of a state government. The carrier would likely have a group that large set up by itself and would apply rate increases to the entire group.
Benefit Choices Most flexible as it will be all the daily/monthly benefits and benefit periods up to a cap less than is available with full underwriting; e.g. $6000-$9000 monthly benefit; 5-6 years benefit period or $500,000 benefit account Usually one or two benefit periods and three to five daily or monthly benefits
Informal Caregivers Could be all cash or a cash alternative Could be a small defined benefit or could be a cash alternative
Employee Education The broker does it The carrier does it
Enrollment Method Could be all online for all applicants or split case with a call center with app emailed to the applicant for an electronic signature. Some carriers are all paper for all applicants. Online with electronic signature for employee and spouse/partner; family members online and print for signature
Partnership-compliant Most are but check application to be sure the Partnership notification is in it Rare. One carrier is approved in about 20 states.
Portability Yes – same benefits and premium Yes – same benefits and premium
List bill Yes – typically minimum of 10 Yes – typically minimum of 50
Request for Proposal (RFP) This can be a very lengthy and complex document to prove that you can handle the enrollment of the account seeking bids. Broker does it as individual carriers don’t provide this service Carrier does it
*Demographics: The age and income makeup of the group. The minimum ratio that carriers typically accept is for at least 40% of the group to be age 40+ and have an income of $40,000-$60,000+, depending on the geographical area. Beyond that, the nature of the industry is considered along with the position title of the employees.  The carriers use that information to determine education levels. About 70% of LTC insurance buyers are college-educated per LTC insurance statistics. If income and age demographic is borderline, the carrier may still agree to issue a proposal if education is high and if the employees are planners; i.e. they are contributing to a qualified retirement plan such as a 401(k) and participate well in other voluntary products. To make this determination, carriers must have date of birth, gender, salary and preferably job title on the census. Regarding gender, it does not help if the majority of the employees are female as decision-making ability comes into question. If there is about the level of interest in an LTCI worksite offering, ask the employer to survey the employees to gauge the interest level.


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