Long Term Care and Disability Insurance
Long Term Care and Disability Insurance
Long Term Care and Disability Insurance
Long Term Care and Disability Insurance
Does long term care insurance really matter?
Presented by Leonard Berthelsen A lot of agents and producers over the years may have asked that question of themselves as rates have gone up, underwriting has gotten stricter and consumer reluctance has increased. Regardless of what rates the carriers have settled on, it’s still pennies on the dollar of what care actually costs. There has to be a value proposition that the producer brings to the table for that client and that is educating the client.- Are they aware of the exposure that their estate is currently in, to the devastation that a lengthy long term care event might cause?
- Will family and/or friends be able or willing to provide on-going and lengthy assistance?
- Government assistance in long term care is getting more difficult to qualify for with any thought of being able to retain assets.
- Is it their desire to remain independent as long as possible in their own home?
Life Insurance
What’s behind door number 3? A life insurance conversion…
Presented by Brian Leising Are you unhappy with the conversion options available to your clients? We typically sell term life insurance to fill a temporary need, but over time needs change. The reasons for coverage change from debt payoff (mortgage) and employment income replacement to social security income replacement, health care expenses and wealth transfer. These are needs your clients will have between retirement and death. Compared to their younger selves (your original term clients), 20-30 years gave your clients not only age, but extra pounds and health problems that didn’t exist decades earlier. What do you do when a new fully underwritten permanent plan of life insurance is not an option? You look at conversion options. Most insurance companies allow policyholders to convert their term policy anytime during their initial level term period, up to around age 70, to any permanent plan they make available at the time of claim. Good news! Your client can get permanent coverage. Bad news! They are at the insurance company’s mercy as to what kind of plan is available. Many carriers limit the products available for conversion, usually omitting their most competitive plans, some offering pricy whole life or current assumption (no guarantees) Universal Life. Some carriers by current practice make all their current permanent plans available. Good for them. What will their current practice be in 20 years? Who will own the company then? Clients have no guarantee an insurance company will continue that practice and may be stuck with no guarantees or with high priced options. If you can sell your client a permanent and term plan from the start, you can solve this problem. We know that doesn’t work in every situation. Clients may not see the need for permanent coverage or the price may be too high. What else can you do? Check back next week for the answer in part two.
Long Term Care and Disability Insurance
Are your clients assets protected if they need long…
Presented by Donna Ries When talking to your clients about extended long term care planning, it is important to emphasize that income pays for care, not assets. Health insurance covers virtually none of the long term care costs of nursing homes, assisted living facilities or in-home care. The care many people may require late in life is paid out of pocket. Even substantial savings can quickly be spent for extended care. The Long Term Care Partnership Program may be an answer to help protect your client’s assets. The 2005 Deficit Reduction Act combines public and private insurance resources to help clients prepare for potential long term care needs. Because state and Medicaid eligibility requirements may vary, you should consult an attorney or tax advisor for information related to a specific situation. Long term care insurance under these programs may create an opportunity to enjoy the benefits of both long term care insurance coverage and asset protection in the event that Medicaid benefits are required. With a Partnership-qualified long term care policy, your client may be able to qualify for Medicaid while retaining more assets than otherwise permitted. To qualify for the benefits of a Partnership Program, the policy must be a federally tax-qualified plan and must meet inflation protection requirements based on the client’s age as of the date of the application. Individual state requirements may vary. Certain states may require specific levels of inflation protection to qualify. If the client is younger than 61, the plan must include compound inflation. For ages 61 to 75, the plan must include some form of inflation protection. As an example, suppose your client purchased Partnership-qualified long term care insurance and received $300,000 in benefits. Usually, your client would be able to keep an additional $300,000 in savings or investments, in addition to the assets your state already allows your client to keep and still meet your state’s asset test for qualifying for Medicaid. Without the Partnership Program, your state may require that your client spend their $300,000 in savings or investments for long term care services prior to becoming eligible for Medicaid. Remember, generally both income and assets are included in determining eligibility for Medicaid, and that the Partnership Program protection relates to your client’s assets only. It is important to note that, in most states, you are not required to use all the benefits of your long term care insurance prior to receiving dollar-for-dollar asset protection. Every benefit dollar counts. It’s critical that you discuss how the cost of extended care will be covered. Call us to discuss how long term care planning can help protect your client’s assets.
Life Insurance