Apr 6th, 2020
Genworth Privileged Choice Flex is the top-selling Long Term Care Insurance product in 2012. It was introduced in most states between August and November of 2011, and is Genworth’s latest incarnation in a series of Long Term Care Insurance plans going back to 1974. Since HIPPA in 1996, Genworth has marketed policies intended to be Tax Qualified under IRS regulations, and Privileged Choice Flex is no exception.
Consult the policy in your State for specific details. This is a summary based on client questions and feedback. This product is not available in all states. As of July 29, 2012, there were 45 states where PC Flex is available.
Privileged Choice Flex vs Privileged Choice and Classic Select
So, how does Privileged Choice Flex compare to past versions of Genworth LTC products? Prior to 2011, Genworth had two products for Long Term Care Insurance:
Privileged Choice (no Flex) was the premium product offered primarily to couples, and included three bells and whistles in most states:
- Monthly payment of benefits
- Home Health Care 0-day waiting period for benefits
- 10-year Survivorship (not available in Florida)
- Enhanced inflation protection options (no claims offset) and International Long Term Care Coverage were included.
- Classic Select was the “a la carte” plan that offered core Long Term Care Insurance coverage at a lower price than Privileged Choice.
Privileged Choice Flex truly combines the advantages of both of these policies and makes for a much more customizable, robust policy. For example, Classic Select had essentially no International Long Term Care Coverage while Privileged Choice Flex does offer a modest overseas benefit. Flex offers a much better Shared care option where you and a spouse or partner can combine their policies.
Enhanced Shared Coverage Options
Virtually every Long Term Care insurer offers Shared coverage options, where a spouse or partner combines their policies to pool benefits for greater risk protection. What makes Genworth Privileged Choice Flex different is that even if one spouse exhausts all of the benefits for both spouses, there’s a backup reserve fund of 50% of theoriginal benefit for the non-claiming spouse. This is not subject to inflation protection, so as time goes on this 50% pool will be smaller and smaller in real terms, but it is a nice benefit as a hedge to a rare “circuit breaker” event where one spouse has an ongoing claim.
We recommend either 3% or 5% Compound Inflation for all clients under 70 years old.
Inflation Protection Options
Standard Inflation Protection options are available with this plan, and it adds a Future Purchase Option not available with prior Genworth LTC plans.
- 3% Compound
- 5% Simple
- 5% Compound
- Future Purchase Option
- No inflation protection
One thing that differentiates Genworth is the pure “no inflation” option where what you buy today is set in stone and cannot be increased without writing a new policy. Most other carriers default to a Purchase Option as their lowest option, meaning even at a bare minimum policy you’re having to pay for that feature. Genworth allows you to strip it completely off if you wish, and offers lower premiums when this option is selected.
At right, a chart showing how a $5,000/mo benefit today may grow in the future. Note the difference between 3% and 5% compound inflation just at the 20th anniversary. Over $300,000 is left out by selecting the 3% option. We recommend scaling back your initial benefit and sticking with 5% compound inflation if at all possible.
With a Privileged Choice Flex plan, you have coverage abroad for up to four years, and without waiver of premium. This means you’d need to transfer back to the US to receive full benefits, including having your premiums waived. See our complete International Long Term Care Coverage page for more details.