Lincoln Financial MoneyGuard II Review (Discontinued)

Lincoln Financial Group's MoneyGuard product line has been one of the most successful and widely sold hybrid long term care insurance products in the United States. MoneyGuard II, the second generation of this popular product, served as a cornerstone of Lincoln's individual life insurance division for several years before being replaced by its successor, MoneyGuard III. In this review, we look back at what MoneyGuard II offered, why it was discontinued, how it compares to MoneyGuard III, and what existing MoneyGuard II policyholders need to know about their coverage.

What Was Lincoln Financial MoneyGuard II?

MoneyGuard II was a universal life insurance policy with an integrated long term care benefit rider. Like other hybrid LTC products, it combined a death benefit with long term care coverage, ensuring that policyholders received value regardless of whether they needed care during their lifetime. The product was built on the success of the original MoneyGuard, which Lincoln introduced in the early 2000s and which became one of the first widely adopted hybrid LTC products in the market.

MoneyGuard II was designed to address the growing concern among Americans about the “use it or lose it” nature of traditional long term care insurance. By combining LTC coverage with a life insurance death benefit and a return of premium feature, MoneyGuard II offered a triple layer of protection:

• If you needed long term care — The policy paid monthly LTC benefits from a substantial benefit pool.
• If you never needed care — Your beneficiaries received a tax-free death benefit.
• If you changed your mind — You could surrender the policy and receive a return of your premiums.

Key Features of MoneyGuard II

Flexible Premium Payment Options

MoneyGuard II offered several premium payment schedules, including:

• Single lump sum premium
• 5-year payment plan
• 10-year payment plan
• Annual payments to age 65
• Annual payments for 20 years

This flexibility made MoneyGuard II accessible to a wide range of buyers, from those with large lump sums available to those who preferred to fund coverage over time from annual savings or income.

LTC Benefit Multiplier

MoneyGuard II allowed policyholders to select an LTC benefit multiplier of 2x or 3x the base death benefit. This multiplier created a pool of long term care funds that could be drawn upon if the policyholder became chronically ill. For example, a policy with a $150,000 death benefit and a 2x multiplier would provide $300,000 in LTC coverage.

Guaranteed Death Benefit

The policy included a guaranteed death benefit that was paid income-tax-free to beneficiaries. The death benefit was guaranteed as long as premiums were paid as scheduled, providing certainty for estate planning purposes.

Return of Premium

MoneyGuard II included a return of premium provision, allowing policyholders to surrender the policy and receive a significant portion of their premiums back. The surrender value was highest in the early policy years and gradually decreased as more of the premium was allocated to cover the cost of insurance and LTC rider charges.

Inflation Protection

MoneyGuard II offered optional inflation protection riders, including compound and simple inflation options. Adding inflation protection increased the premium but helped ensure that LTC benefits would maintain their purchasing power over time.

Comprehensive Care Settings

Benefits could be used across a wide range of care settings:

• Home health care and home-based personal care
• Adult day care
• Assisted living facilities
• Memory care facilities
• Skilled nursing facilities
• Hospice care

Partnership Program Qualified

MoneyGuard II was qualified under the Long Term Care Insurance Partnership Program in most states, meaning LTC benefits received could help protect an equivalent amount of personal assets from Medicaid spend-down requirements.

Why Was MoneyGuard II Discontinued?

Lincoln Financial discontinued MoneyGuard II not because of any defect in the product, but as part of a natural product evolution. Insurance carriers regularly update and replace their product lines to reflect changes in the market, regulatory environment, and customer needs. The decision to replace MoneyGuard II with MoneyGuard III was driven by several factors:

• Updated pricing and actuarial assumptions — As the insurance industry gained more data and experience with hybrid LTC products, Lincoln updated its pricing models and actuarial assumptions to reflect real-world claims experience and persistency rates.
• Regulatory changes — Changes in state insurance regulations and federal tax law prompted product design updates that were incorporated into MoneyGuard III.
• Market competition — The hybrid LTC market has become increasingly competitive, with carriers like Nationwide, Pacific Life, and Mutual of Omaha all offering compelling products. MoneyGuard III was designed to maintain Lincoln's competitive position.
• Enhanced features — MoneyGuard III introduced new features and improved existing ones based on customer feedback and agent input gathered during the MoneyGuard II era.
• Technology and administration improvements — The new product platform incorporates improved digital tools for application processing, policy management, and claims administration.

MoneyGuard II vs. MoneyGuard III: Key Differences

For those familiar with MoneyGuard II, here is how the successor product compares:

Premium Flexibility

MoneyGuard III expanded upon the premium payment options available in MoneyGuard II. While both products offer single premium and multi-year payment options, MoneyGuard III added additional payment schedule choices and introduced more competitive pricing at certain age bands and health classifications.

LTC Benefit Design

MoneyGuard III refined the LTC benefit structure with updated multiplier options and improved benefit calculation methods. The newer product also offers enhanced inflation protection options that better address the long-term trend of rising care costs.

Underwriting

MoneyGuard III features an updated underwriting process that Lincoln describes as more streamlined and consumer-friendly. The company has invested in technology to speed up the application and approval process, potentially reducing the time from application to policy delivery.

Policy Riders and Options

MoneyGuard III includes updated rider options and may offer features that were not available in MoneyGuard II, such as enhanced spousal discount structures, updated cash value provisions, and refined benefit trigger definitions.

Pricing

Pricing differences between MoneyGuard II and MoneyGuard III vary by age, health class, and benefit structure. In some cases, MoneyGuard III may be more expensive due to updated actuarial assumptions; in others, it may be more competitive due to operational efficiencies and updated product design. The only way to accurately compare is to request current quotes from a licensed professional.

What Existing MoneyGuard II Policyholders Should Know

If you already own a MoneyGuard II policy, here are the key points to understand:

Your Policy Remains in Force

The discontinuation of MoneyGuard II as a product available for new sales does not affect existing policies. Your MoneyGuard II policy remains fully in force, and all guarantees, benefits, and provisions outlined in your policy contract continue to apply. Lincoln Financial is contractually obligated to honor all terms of your existing policy.

Premiums Are Unchanged

Your guaranteed premium schedule is unaffected by the product discontinuation. If you are making annual or multi-year premium payments, those amounts remain as originally stated in your policy. There are no rate increases associated with the transition from MoneyGuard II to MoneyGuard III.

Benefits Are Guaranteed

All death benefit and long term care benefit guarantees in your MoneyGuard II policy remain intact. The LTC benefit pool, monthly benefit amount, benefit multiplier, and inflation protection (if elected) all continue to function as described in your original policy documentation.

Claims Processing Continues Normally

If you need to file a long term care claim on your MoneyGuard II policy, the process is the same as it has always been. Contact Lincoln Financial's claims department to initiate the process. The fact that the product has been replaced by MoneyGuard III has no impact on claims handling for existing MoneyGuard II policies.

Should You Exchange for MoneyGuard III?

In most cases, existing MoneyGuard II policyholders should not exchange their policy for a MoneyGuard III. Here is why:

• Your MoneyGuard II policy was priced based on your age and health at the time of original application. A new MoneyGuard III policy would be priced at your current (older) age, likely resulting in higher premiums for equivalent coverage.
• You would need to go through medical underwriting again. If your health has changed since you purchased MoneyGuard II, you might not qualify for the same health classification or might be declined entirely.
• Any cash value or return of premium benefits in your existing policy have been building over time and would be reset in a new policy.

However, there may be specific circumstances where a review makes sense, such as if you need to significantly restructure your coverage or if your financial situation has changed substantially. Always consult with a licensed insurance professional before making any changes to existing coverage.

About Lincoln Financial Group

Lincoln Financial Group is a Fortune 500 company with a long history dating back to 1905. The company offers a diversified portfolio of insurance, retirement, and investment products. Lincoln holds strong financial ratings, including A+ (Superior) from A.M. Best and AA- from S&P Global Ratings, reflecting its strong capitalization and operating performance.

Lincoln has been a pioneer in the hybrid LTC space. The original MoneyGuard product, launched in the early 2000s, was one of the first widely available hybrid LTC products and helped establish the category as a mainstream insurance solution. The company's continued investment in the MoneyGuard product line through MoneyGuard II and now MoneyGuard III demonstrates its long-term commitment to helping Americans plan for long term care.

Pros of MoneyGuard II (Historical)

• Triple protection — Death benefit, LTC coverage, and return of premium in one product.
• Guaranteed premiums — Premiums locked in at issue, no rate increases.
• Strong carrier — Backed by Lincoln Financial Group, one of the largest and most stable insurance companies in the US.
• Flexible payment options — Multiple premium payment schedules to fit different financial situations.
• Partnership Program qualified — Asset protection benefits in participating states.
• Comprehensive care settings — Benefits for home care, assisted living, nursing home, and more.
• Established track record — Built on the success of the original MoneyGuard, with years of real-world claims experience.

Cons of MoneyGuard II (Historical)

• No longer available for new purchases — The most significant limitation is that MoneyGuard II is no longer being sold. New applicants must consider MoneyGuard III or other hybrid products.
• Premium commitment — Like all hybrid LTC products, MoneyGuard II required a significant financial investment.
• Medical underwriting — Not all applicants qualified based on health requirements.
• Complexity — The interplay between death benefit, LTC benefits, cash value, and return of premium required careful understanding.
• 90-day elimination period — Standard waiting period before LTC benefits began.

Looking for Current Hybrid LTC Options?

Since MoneyGuard II is no longer available for new purchases, here are the current hybrid LTC products you should consider:

• Lincoln Financial MoneyGuard III — The direct successor to MoneyGuard II, offering updated features, competitive pricing, and Lincoln's strong financial backing.
• Nationwide CareMatters II — One of the most popular hybrid LTC products on the market, with strong LTC benefit multipliers and inflation protection options.
• Pacific Life Premier Care — A flexible universal life-based hybrid with competitive LTC multipliers and exceptional carrier financial strength.
• Mutual of Omaha LTC Annuity — An annuity-based hybrid option ideal for repositioning existing assets via 1035 exchange.

The best approach is to compare quotes from multiple carriers to find the product that offers the best combination of benefits, pricing, and carrier financial strength for your individual situation. A licensed insurance professional who specializes in hybrid LTC products can help you navigate these options and make an informed decision.