Lincoln MoneyGuard III Hybrid Long Term Care Insurance Review

Introduction to Lincoln Financial Group

Lincoln Financial Group is one of the most established and respected financial services companies in the United States. Founded in 1905 and headquartered in Radnor, Pennsylvania, Lincoln Financial operates through several subsidiaries, with The Lincoln National Life Insurance Company being the primary issuer of its insurance products. The company has a long history of providing annuities, life insurance, retirement plan services, and group insurance to millions of Americans.

Lincoln Financial has been a pioneer and leader in the hybrid long-term care insurance market. The company's MoneyGuard product line was one of the first hybrid LTC products to gain widespread adoption in the financial planning community, and Lincoln has continued to innovate and refine these products over multiple generations. MoneyGuard III represents the company's current and most advanced hybrid LTC offering, building on lessons learned from the original MoneyGuard and MoneyGuard II (now discontinued).

Lincoln's commitment to the hybrid LTC market is noteworthy. While many insurers have exited or scaled back their long-term care offerings, Lincoln Financial has consistently invested in product development, distributor education, and consumer awareness for hybrid LTC solutions. This dedication has made MoneyGuard one of the best-known brand names in the hybrid long-term care insurance space.

What Is MoneyGuard III?

MoneyGuard III is a universal life insurance policy with a long-term care benefit rider that provides three layers of financial protection in a single product:

• Long-term care coverage: If the policyholder needs long-term care, MoneyGuard III provides monthly benefits to help pay for nursing home care, assisted living, home health care, adult day care, and other qualifying services.
• Life insurance death benefit: If the policyholder passes away without needing long-term care, the death benefit is paid to beneficiaries income-tax-free.
• Return of premium: If the policyholder decides they no longer want or need the coverage, they can surrender the policy and receive a return of premium (subject to policy terms and timing), ensuring that the premiums paid are not lost.

This three-pronged approach addresses one of the fundamental objections many consumers have to traditional standalone long-term care insurance: the fear that premiums will be "wasted" if care is never needed. With MoneyGuard III, the premium dollars go to work regardless of what happens, whether the policyholder needs long-term care, passes away, or simply changes their mind.

How MoneyGuard III Replaced MoneyGuard II

MoneyGuard III is the successor to Lincoln Financial's MoneyGuard II, which is no longer available for new sales. The transition from MoneyGuard II to MoneyGuard III brought several enhancements and changes designed to improve the product's value proposition and competitiveness. Key differences include:

• Enhanced benefit structure: MoneyGuard III offers updated benefit calculations and options that reflect current market conditions and consumer needs.
• Updated pricing: Premiums and benefit amounts have been recalibrated to reflect current interest rates, morbidity assumptions, and regulatory requirements.
• Improved flexibility: MoneyGuard III provides additional premium payment options and benefit design flexibility compared to its predecessor.
• Modern underwriting: The underwriting process has been streamlined and updated to reflect current medical knowledge and risk assessment capabilities.

If you currently own a MoneyGuard II policy, it remains in force and fully valid. However, if you are shopping for new coverage today, MoneyGuard III is the product that will be available for purchase. An advisor can help you compare MoneyGuard III to other current offerings to ensure you are getting the best available product for your needs.

Key Features of MoneyGuard III

Universal Life Insurance Foundation

MoneyGuard III is built on a universal life (UL) insurance chassis. Universal life insurance is a form of permanent life insurance that provides flexible premiums and an adjustable death benefit. The policy accumulates cash value based on credited interest rates declared by Lincoln Financial, subject to a guaranteed minimum rate.

The UL foundation means that MoneyGuard III premiums, once set, are designed to remain level for the life of the policy. However, it is important to understand that the policy's performance depends in part on the interest rates credited to the cash value. If actual credited rates fall below the rates assumed in the original illustration, the policy's long-term performance could differ from projections. Lincoln mitigates this risk through guaranteed minimum interest rates and the guaranteed benefit period feature discussed below.

Guaranteed Benefit Period

One of MoneyGuard III's most important and competitive features is the guaranteed benefit period. This is the length of time that long-term care benefits are guaranteed to be paid, regardless of the policy's cash value or account performance. Depending on the plan design, the guaranteed benefit period can range from two years to six years or more.

The guaranteed benefit period is significant because it provides certainty about the minimum duration of LTC coverage. Even if interest rates are lower than assumed, even if the policy's cash value is depleted, the guaranteed benefit period ensures that LTC benefits will continue for the specified duration. This guarantee distinguishes MoneyGuard III from some competitors where the LTC benefit duration depends on the policy's cash value performance.

Return of Premium

MoneyGuard III includes a return-of-premium feature that allows the policyholder to surrender the policy and receive a return of premiums paid, subject to the policy's terms and the timing of the surrender. This feature is particularly appealing to consumers who are concerned about committing a large sum to an insurance product and want the reassurance that they can get their money back if circumstances change.

The return-of-premium feature typically applies after the policy has been in force for a minimum period and may be subject to certain conditions. It is important to review the specific policy terms to understand exactly how the return of premium works, including any surrender charges that may apply in the early policy years.

Flexible Funding Options

MoneyGuard III offers several ways to fund the policy, accommodating different financial situations and preferences:

• Single premium: A one-time lump-sum payment that fully funds the policy from day one. This is popular for repositioning assets from savings accounts, CDs, or other low-yielding investments.
• Five-pay: Five annual premium payments that provide full coverage after the payment period is complete.
• Ten-pay: Ten annual premium payments that spread the cost over a longer period, reducing the annual financial commitment.
• Twenty-pay: Twenty annual premium payments that further reduce the per-year cost, making coverage accessible for those who prefer smaller annual outlays.
• 1035 exchange: Existing life insurance policies or annuities can be exchanged into MoneyGuard III on a tax-free basis under Internal Revenue Code Section 1035, allowing consumers to reposition underperforming or no-longer-needed financial products.

Long-Term Care Benefits in Detail

MoneyGuard III provides comprehensive long-term care benefits that are triggered when the policyholder is certified as chronically ill, meaning they are unable to perform at least two of six activities of daily living (ADLs) without substantial assistance, or they have a severe cognitive impairment requiring substantial supervision. The six ADLs are bathing, dressing, toileting, transferring, continence, and eating.

Benefit Trigger and Elimination Period

Once the policyholder qualifies for benefits, there is typically an elimination period (commonly 90 days) during which the policyholder is responsible for their own care costs. After the elimination period, monthly LTC benefits begin. The elimination period serves a function similar to a deductible in health insurance, keeping the cost of the policy lower by excluding short-term care needs.

Monthly Benefit Amount

The monthly long-term care benefit is calculated as a percentage of the total benefit pool, divided by the number of months in the benefit period. The total benefit pool is determined by the policy's death benefit and the benefit multiplier selected at the time of purchase. For example, if the death benefit is $200,000 and a 3x benefit multiplier is selected, the total LTC benefit pool would be $600,000, with monthly benefits calculated based on the chosen benefit period.

Covered Services

MoneyGuard III covers a broad range of long-term care services, including:

• Nursing home or skilled nursing facility care
• Assisted living facility care
• Memory care or Alzheimer's care units
• Home health care provided by licensed agencies
• Home health aide services
• Adult day care or adult day health care
• Hospice care
• Respite care (temporary relief for a primary caregiver)
• Bed reservation benefits (to hold a facility bed during a temporary absence)

Inflation Protection Options

MoneyGuard III offers optional inflation protection riders that increase the LTC benefit over time to help keep pace with rising care costs. Options may include:

• 3% compound annual increase: Benefits grow by 3% compounded annually, providing steady increases that accelerate over time.
• 5% compound annual increase: A more aggressive inflation hedge that provides larger benefit increases, though at a higher premium cost.
• CPI-based increases: Benefits may be tied to the Consumer Price Index, adjusting based on actual inflation rates.

Financial Strength and Ratings

Lincoln Financial Group maintains strong financial strength ratings from all major rating agencies:

• A.M. Best: A+ (Superior) - Reflecting Lincoln's strong balance sheet, excellent operating performance, and appropriate business profile.
• Standard & Poor's: A+ (Strong) - Indicating a strong capacity to meet financial commitments to policyholders.
• Moody's: A1 (Good) - Reflecting an upper-medium-grade financial position with strong ability to pay claims.
• Fitch: A+ (Strong) - Confirming Lincoln's solid financial position and claims-paying ability.

These high ratings are particularly important for a hybrid LTC product because policyholders need confidence that Lincoln Financial will be able to honor its commitments 20, 30, or even 40 years in the future. Lincoln's long operating history and consistent strong ratings provide this reassurance.

Underwriting and Eligibility

MoneyGuard III requires both life insurance and long-term care underwriting. Lincoln Financial's underwriting process is thorough but generally efficient, reflecting the company's extensive experience in the hybrid LTC market. The process typically involves:

• A detailed health questionnaire covering medical history, current conditions, and medications
• A paramedical examination including blood and urine testing
• A review of attending physician statements and medical records
• A cognitive screening assessment, particularly for applicants age 60 and older
• A telephone or video interview to verify application information
• Financial suitability review to confirm the product is appropriate for the applicant's situation

MoneyGuard III is generally available for applicants ages 40 to 80, though the most favorable pricing and broadest benefit options are typically available for applicants in their 50s and early 60s. Lincoln offers multiple health classifications including preferred, standard, and modified risk categories that affect pricing. The company has a reputation for being competitive in its underwriting, sometimes offering favorable classifications for health conditions that other carriers rate more severely.

Pros of Lincoln MoneyGuard III

• Guaranteed benefit period: The guaranteed minimum duration of LTC benefits, regardless of policy performance, is one of the strongest guarantees in the hybrid LTC market. This provides certainty that is difficult to match with products where the benefit duration depends on cash value performance.
• Return of premium: The ability to surrender the policy and receive premiums back gives consumers a safety net that addresses the biggest objection to insurance products: the fear of losing money if the product is never used.
• Pioneer and market leader: Lincoln Financial's long history with MoneyGuard products means the company has deep experience in hybrid LTC product design, pricing, underwriting, and claims management.
• Flexible funding options: Single-pay, five-pay, ten-pay, twenty-pay, and 1035 exchange options provide substantial flexibility to accommodate different financial situations.
• Strong financial ratings: A+ ratings from A.M. Best, S&P, and Fitch provide confidence in Lincoln's long-term ability to honor policy commitments.
• Broad advisor network: MoneyGuard is one of the most widely distributed hybrid LTC products, meaning most independent insurance advisors are familiar with it and can provide knowledgeable guidance.
• Competitive underwriting: Lincoln has a reputation for favorable underwriting, potentially offering better pricing for applicants with certain health conditions.
• Comprehensive LTC coverage: Benefits cover a wide range of care settings from nursing homes to home care, with optional inflation protection to maintain purchasing power over time.

Cons of Lincoln MoneyGuard III

• Interest rate sensitivity: As a universal life product, the policy's non-guaranteed values depend on credited interest rates. If actual rates are lower than illustrated, the policy may not perform as projected beyond the guaranteed values. However, the guaranteed benefit period mitigates this concern for LTC benefits.
• Complexity: Universal life products with LTC riders involve multiple moving parts including cost of insurance charges, credited interest rates, rider charges, and benefit calculations. Understanding how all these elements interact requires careful review of the policy illustration.
• Premium commitment: While funding options are flexible, the total premium required for meaningful coverage can be substantial, particularly for single-premium designs. This may make MoneyGuard III less accessible for middle-income consumers.
• LTC benefits reduce death benefit: Using LTC benefits draws down the death benefit, meaning less is available for beneficiaries. This is inherent in the hybrid design but is a trade-off that some consumers find undesirable.
• Limited cash value accumulation: MoneyGuard III is designed primarily as a protection product rather than a cash value accumulation vehicle. The cash value may not grow as robustly as dedicated cash value products.
• Inflation protection adds cost: Adding a compound inflation rider significantly increases the premium, and without inflation protection, the fixed benefit amount may not keep pace with rising care costs over a 20-30 year period.
• Not available in all states: Product availability and specific features may vary by state due to regulatory differences.

Who Is Lincoln MoneyGuard III Best For?

MoneyGuard III is well-suited for a broad range of consumers, which is one reason it has become one of the most popular hybrid LTC products in the market:

• Those who prioritize guarantees: The guaranteed benefit period is ideal for consumers who want certainty about the minimum duration of their LTC coverage.
• Risk-averse planners: The return-of-premium feature appeals to individuals who are uncomfortable committing large sums to insurance products without a safety valve.
• Asset repositioners: Consumers looking to move funds from underperforming assets (CDs, savings, old life insurance, unused annuities) into a product that provides meaningful protection.
• Those who want a well-known, widely distributed product: MoneyGuard's market presence means extensive advisor familiarity, ample educational resources, and a proven claims process.
• Applicants with moderate health concerns: Lincoln's competitive underwriting may offer favorable outcomes for applicants who might receive less favorable classifications from other carriers.
• Individuals who want both LTC and life insurance: If you need a death benefit and LTC protection, MoneyGuard III efficiently addresses both needs.

Comparing MoneyGuard III to Other Hybrid LTC Products

MoneyGuard III competes directly with several other well-regarded hybrid LTC products. Understanding the key differences can help you determine which product is the best fit for your situation:

• MoneyGuard III vs. MassMutual CareChoice: MassMutual's CareChoice uses a whole life foundation, providing stronger guarantees and dividend potential. MoneyGuard III offers more funding flexibility and the guaranteed benefit period. The choice often depends on whether you prefer whole life's guarantees or UL's flexibility.
• MoneyGuard III vs. OneAmerica Asset-Care: OneAmerica's Asset-Care offers both annuity and life-based options and excels in joint coverage for couples. MoneyGuard III's guaranteed benefit period and return of premium are its standout features in this comparison.
• MoneyGuard III vs. Brighthouse SmartCare: Brighthouse SmartCare adds an investment component through variable sub-accounts, offering higher growth potential but also introducing market risk. MoneyGuard III is the safer, more predictable choice.
• MoneyGuard III vs. John Hancock: John Hancock's hybrid products offer the unique Vitality wellness program and strong brand recognition. MoneyGuard III counters with its guaranteed benefit period and broader funding options.

Getting Started with MoneyGuard III

If Lincoln Financial's MoneyGuard III sounds like it could be the right fit for your long-term care planning needs, the next step is to request a personalized illustration. An illustration will show you the specific premiums, benefits, and guarantees based on your age, health classification, desired coverage amount, and funding preference.

Our team of independent advisors specializes in hybrid long-term care insurance and works with all major carriers, including Lincoln Financial. We can provide you with MoneyGuard III illustrations alongside quotes from competing products, giving you a comprehensive comparison to make the most informed decision. There is no cost and no obligation to get started.