Long Term Care vs. Short Term Care – What…

Presented by Leonard Berthelsen Most agents probably haven’t given much thought to this issue and quite frankly, I can’t blame them.  Long term care insurance has experienced slow growth over the past several years for a variety of reasons.  Lack of understanding the protection, underwriting challenges, cost of coverage which continues to increase, and then the ever-present rate increases on older blocks of business.  Long term care can still meet the needs of your clients; however, there is another consideration to think about. Let’s take all the issues above and turn them into sales opportunities for 2016.  Short term care/recovery care products may have arrived at the right time.  They are easier products to understand and explain without all the compliance restrictions of traditional long term care insurance.  With limited benefit durations (generally no more than 360 days of coverage), underwriting risks are dramatically reduced for the carrier and the pricing reflects this.  Yes, short term care plans are relatively new to the market, but certainly fill a void that long term care has left. Start 2016 off with a recommitment to address the needs of your clients regarding short nursing home stays, recovery care after an illness, accidents, or surgeries.  When pricing or underwriting challenges are dragging down your ability to place coverage, these newer shorter duration products just might be the answer. Look for our promotions for the addition of Short Term Care/Recovery Care products or call your Sales Manager at 800-397-9999 now for details.

Long Term Care Concerns

Presented by Michelle Daharsh Not many people really ever want to think that they will need long term care services because it is not a pleasant thought. Having to rely on someone else because we became frail or our cognitive ability has slowed are certainly not things that we look forward to. According to the 2015 Medicare & You, Centers for Medicare & Medicaid Services, 70% of people over the age of 65 will need long term care services and support at some point in their life. Sort of an ominous fact, don’t you think? Ask your client this simple question: “What is your greatest concern when it comes to long term care?” This question will be sure to stir up answers ranging from not having to rely on their family for care, or staying in their home as long as possible, or they hear it is awfully expensive. Maybe their concern is protecting the legacy that they worked so hard to build over the years? Regardless of the answer, the end result is most likely all the same – if a long term care event occurs and they don’t have long term care insurance in place, all of these concerns can, and likely will, be exposed. Being able to uncover your clients’ concerns for long term care puts you, as the agent, in a position to educate them on what protection it does provide. Not only does long term care insurance provide care for the client, but it also protects the family, their home and their legacy. Show your clients the need for long term care insurance first – ask them questions, assess their situation, and help them understand their options. Doing this will give them the peace of mind that their biggest concerns are protected and making the purchase of long term care insurance a much easier decision.

Disability Income Protection – Good for Both the Client…

Presented by Tim Dreher There are many good reasons for making the effort to start talking to your clients about Disability Income protection. Two very important ones are protecting your clients from the financial consequences of a debilitating accident/injury or serious sickness/illness, and the potential significant increase in your income from writing a new line of business. It’s a natural win-win. Disability Income protection is a great product. It protects what many consider to be your client’s greatest asset…their ability to earn a living. With someone becoming disabled in this country every 1.2 seconds, the disabled have become the largest minority is the US. And yet, 69% of America’s workforce has no long term disability coverage at all. The market for Income protection insurance is wide open. It should be your mission in 2016 to talk to as many people as possible about this affordable coverage. Don’t feel shy about bringing up the subject of a disability. Let your client know that you care enough about them and their financial well-being that they at least need to have the conversation with you and explore their options. Be proud of the fact that no one else can protect them like you can. Their employer, their accountant, their attorney, and the government can’t protect them like you can. Only you, as their insurance professional and financial advisor, can protect them from a devastating financial disaster should they become unable to earn a paycheck due to a disability. Nearly 60% of all home foreclosures are due to a disability and you are in the best position to help your clients make sure that it doesn’t happen to them. Don’t let your clients, friends or family have to rely on a bake sale or a spaghetti feed to help pay their bills if they should ever find themselves in a position of being unable to work and make a living. In a recent survey, only 18% of consumers remember their insurance agent ever mentioning Disability Income protection to them. Make talking about Income Protection a part of every conversation that you have with your clients and prospects in 2016 and you will reap the rewards. Grab a brochure and get out and see the people. Let’s make it a great new year in protecting people’s income & assets.  

The Time has Come for Some Frank Discussions with…

Presented by Leonard Berthelsen Over the last dozen or so years, the financial services industry has been focused on how well the baby-boom generation has prepared itself for retirement.  As it turns out, some have planned well, others not so well, and the remaining didn’t do anything.  I don’t think it is a generational issue, more so the result of our diverse backgrounds and beliefs that we have in America. As I was doing some research for this latest blog, it became abundantly clear to me that there may be a huge disconnect with the Gen Xers and Millennial generations when it comes to financial planning or even knowing what to expect with retirement.  As mentioned, one glaring issue is the number of people that have simply done nothing.  The Millennial generation consists of approximately 75 million adults between 18-34 years of age, and the Gen Xers represent about 41 million adults from age 34 to 54.  That is a combined total of 116 million adults, of which almost half have not had any meaningful conversations about retirement or how to save for it.  Are these going to be the “lost generations” for our industry? I certainly hope not, but our challenge lies ahead in connecting with these groups. A recent study revealed that 51% of Millennials were calculating their retirement based not on sound financial calculations, but rather, on what they called “an educated guess.” The Gen Xers didn’t respond any more favorably about this issue, with 55% of them saying that “they will somehow figure it out once they get there.”  Not real encouraging for the long term growth of our business. Is it too late for these two groups?  Of course not. There is still ample time to correct their misconceptions and get them on the right track to planning for retirement.  I like to use real life experiences in writing as it seems to hit home a little better. I have two sons that are Gen Xers and each has chosen very different paths in life.  Even though they are going through life on different paths, both have come to the same conclusion about saving for retirement.  My youngest son who is in our business took it to heart right away that he needed to plan for the future.  He is preparing for his future where he won’t be able to work or will want to stop working and needs to set aside funds for those circumstances.  He is on a good path, even though he has small children, college expenses and possibly weddings to pay for in the future.  He put a plan in place and has stuck with it. Not easy sometimes, but discipline won out. My oldest son, who became an educator, was never very interested in having discussions about their financial future or how they would get there.  I learned to not push too much with him about this issue as his take on things varies considerably from mine.  He recently changed careers and asked me to sit down with him and put a plan together for him to continue saving for their future.  I was amazed at what he had done on his own without any meaningful advice from me about saving for retirement.  I had always thought that this kind of “stuff” just wasn’t important to him.  Guess what, it is.  Different paths, but the end results come out close to the same for each of them. Sometimes it is the little off-the-cuff things we say that have the most meaning.  I did no formal push with either one of them about saving for retirement, but always made sure they knew what I was doing and why.  Sometimes I was more frank than other times, but they always got the message.  Maybe we have to do the same with our clients. Over time it might be the little frank things that we do or say that will make the difference. These are generations that have a much skewed view of Social Security and its health.  We need to make sure that they are getting the message, either formally or off-the-cuff.  Our industry’s future depends upon it.

With Experience Comes Knowledge.  Are the LTCi Carriers Getting…

Presented by Leonard Berthelsen We certainly would like to think that knowledge comes from experience and that we are onto a brighter future with long term care insurance.  A recent article on the website LifeHealthPro.com outlines many of the issues affecting LTCi carriers and the impact that it has on policy design and pricing.  The article outlines a recent study that was completed using Society of Actuaries (SOA) data from 2000 through 2011. In that data, of 172,000 claimants of long term care benefits representing $7 billion in claims revealed some important information such as, “that although actual claims for LTCi policies with lifetime benefits may be higher than those for policies with limited benefits, the claims incidence for policies with limited benefit periods is actually higher than the incidence for policies with lifetime benefits.” This shows that the concern for lifetime benefits from the carriers’ perspective may have been too conservative and might open the door to future benefits being available in longer durations.  Another excerpt from the LifeHealthPro article that dealt with substandard issued LTCi policies was, that despite the fact that “the substandard risk category paid more for coverage than policyholders in the standard or premium category, they are less likely to file claims than policyholders in the standard category.”  The conclusion drawn here from the claims data compiled by the SOA is that the carriers pricing again may have been too conservative in relationship to their overall risk for this class of applicants.  Are the carriers using this new found “tool” (claims data)?  In my opinion it appears that at least some of them are.  New generation of LTCi products seem to be designed based on some of the data on claims and benefit utilization, and that is a good thing.  As the carriers better understand the data put into their pricing model, new versions of LTCi will be introduced and the future certainly looks brighter today than 5 years ago.  LTCi products related to linked benefits, life insurance and annuities all have had provisions and riders recently developed to address the long term care event that many of its policyholders will likely face.  As is the case with most industries that have government regulations and oversight, we have to have the regulators onboard with change as well.  Having them recognize the need for improvement in plan design, pricing and overall features will be a big step for an industry wanting to succeed, but also needing to be profitable.  Regulators in recent years have had to wrangle with the issue of carrier rate increases on previously sold LTCi plans.  This is not an easy task for them or for the carriers.  No one likes rate increases and it is certainly never easy explaining this to the policyholder.  Maybe some of this data will help the carriers get it right.  Will we see a resurgence of interest from carriers to enter the LTCi market place that left in previous years, or new carriers that see an opportunity for new growth?  Time will tell, but one thing is for certain, the more knowledge and experience that a carrier and an industry has, the better the products and better the pricing.  It’s funny how the very reason why we sold LTCi is what is giving us the glimmer of hope for a brighter future – CLAIMS!