Providing LTC Coverage for an Uninsurable Spouse

Presented by Tim Dreher Long Term Care awareness month is November and I wanted to expand on my last blog where I wrote about adding an insurable spouse/partner to take advantage of the substantial discounts that the carriers provide. In most cases the combined premium when adding the spouse/partner at minimum benefits, is less than if the one applied for coverage by themselves. So what can be done in a situation where a spouse/partner is uninsurable? This can be a challenge to even the most seasoned producer. Many times the prospect will abruptly end the conversation when it is determined that there is an uninsurable spouse/partner.

It is important to point out to the prospect that what we see frequently happen, is the healthy spouse/partner becomes the care giver for that uninsurable spouse/partner. Many times that can happen much sooner than what anyone anticipated. As a result of being that caregiver, the health of the insurable spouse/partner declines rapidly due to the stresses of being that caregiver. It has been reported that up to 60% of caregivers were unprepared for the physical demands of being that caregiver.1 There is probably not a better argument for the healthy spouse/partner to consider and purchase LTCi.

Mutual of Omaha’s MutualCare LTCi policy has a very unique rider, called the Security Benefit Rider that can be added to an LTC policy to provide a solution for just such a situation. If the insured spouse/partner requires long term care services after the policy is in effect, the Rider can be activated to provide additional funds to help pay for the cost of providing care for the uninsurable spouse/partner. Up to 60% of the insured’s monthly reimbursement benefit is made available to help pay for approved care for the uninsured spouse/partner. There is no medical underwriting required for this Rider, and the additional benefits paid out for the approved care do not reduce the insured’s policy limits. It is a separate benefit for an uninsurable spouse. Unfortunately, there will be times when a producer will find themselves in a situation where couples/partners apply for coverage and one is declined. When this happens, we often will hear “If we both can’t get it, than we don’t want it”. You might want to consider this rider, as it might just be the answer to saving the sale. This unique feature when understood, can be a great relief for uninsurable spouses/partners. Talk with one of the LTCi marketing specialists at Financial Brokerage about more details on how this rider works.
  1. Transamerica LTC study 2015

November is Long Term Care Awareness Month

Presented by Tim Dreher The month of November is Long Term Care Awareness month and as we move into the holiday season, now may be an opportune time to begin that LTC conversation that you’ve been putting off with your clients! This is a time of the year when many families gather together to celebrate the season so what better time to encourage your clients and their families (especially your client’s children) to have “the talk”. Industry studies have shown that only about 10% of consumers have had a conversation with their parents or in-laws regarding long term care. Tell them not to wait until it’s too late just because it is a somewhat uncomfortable conversation to have. Most parents don’t like the idea of needing help from their children when they have spent their entire adult lives raising and taking care of their kids. That possible role reversal can be very difficult for a parent to accept. Although the conversation may be difficult, it could also be one of the most important conversations spouses could have with each other, children could have with their parents, and you as their advisor could have with them. That’s where you, as the agent and advisor, come in. Remind them that they need to talk about not only how and where they would like to receive care, but also, and just as important, who is going to provide that care, and most importantly, how will it be paid for. By doing so, they are preserving the legacy they have worked so hard to protect. Having a plan in place should a long term care event occur goes a long way to alleviate much of the worry that can come with an uncertain future. There is a great amount of misinformation and misunderstanding regarding available long term care services and it’s your job to be there for them as a source of correct information and advice. The time to discuss, prepare and plan with your clients is now, not waiting until a long term care event arises and a family is forced to make many decisions that could be very costly. Take this holiday season to have the “talk” with your clients so they in turn can have an informed discussion with their family. Both you and your client will be glad the conversation happened.

Do you have the tools to be successful this…

Presented by Michelle Daharsh Medicare’s Annual Enrollment Period (AEP) is one of the busiest times of the year for producers that work the senior market and it is right around the corner! Every year from October 15 – December 7, people enrolled in Medicare Advantage (MA) plans have the opportunity to dis-enroll from their current plan and select a new MA plan or return to Original Medicare and purchase a Medicare supplement policy. It’s also the time when MA organizations can discontinue plans which could leave your over age 65 clients looking for health coverage elsewhere. Keep in mind, that even though this is the enrollment time for MA members to enroll/dis-enroll, Medicare supplement members can make changes to their current plan at any time throughout the year, with any carrier. It’s important to stay in touch with your clients as they approach Medicare age as well as current Medicare supplement clients because many situations can occur that will leave them looking for plan solutions. Whether it’s aging into Medicare and finding the best plan for them, or their current plan has faced a rate increase, these situations are a great opportunity to offer that expert help that you bring to the client. Regardless of the situation, do you have the tools to help your senior clients make these necessary healthcare decisions? Financial Brokerage is proud to be representing seven strong Medicare Supplement carriers that hold a national footprint in the Medicare industry and provides an online state of the art quoting portal with e-app capabilities – we have the resources you need in making your client’s Medicare healthcare decisions simple! Visit our website and access these tools to put you on track for your most successful Medicare season yet!

Insuring a Spouse For Free with LTCi, (well almost)

Presented by Tim Dreher Nearly every day while working with insurance producers, I get a request to run an LTCi illustration for an individual quote for a person whom is either married or has a domestic partner. In these situations, I always ask why we are not quoting the other spouse/partner. The answers that I normally hear are either the spouse/partner is uninsurable or that the other spouse/partner is just not interested in purchasing LTCi. I have noticed that the majority of these situations is a wife wanting LTC protection and a husband that either does not see the need or doesn’t want it because “I’ll never need it, I’ll drop dead first”. Let’s face it, most caregivers in a long term care situation are women whom have seen it happen to a friend or maybe have even been a caregiver themselves and understand the value and need for LTC insurance. Many of the LTC carriers we work with at Financial Brokerage offer a substantial discount for couples or domestic partners when both apply for coverage. In those cases where the spouse/partner is insurable, I will suggest adding the spouse/partner to the quote at the minimum benefits available in order to take advantage of the spousal/partner discount. It has been my experience that adding the spouse/partner at the minimum benefits results in a premium that is less for both spouses/partners than the cost for a policy where only one is applying. For example, let’s look at a couple, female and male, both age 55, looking at a plan with a $5,000 per month benefit for her, 5 year benefit duration, and a 90 day elimination period with 3% compound inflation protection where the female wants coverage but the husband does not. I ran the illustrations with 3 of our most competitive carriers. By adding the husband at minimum benefits ($1,500 per month for 2 years, with a 90 day elimination period and no inflation) the resulting savings were between 13% up to a whopping 37% savings over the price of quoting the female only. That is giving the benefit quoted above for the female spouse and the male (at minimum protection) for under the premium of what it would have been for her plan only. The savings for a 3 year benefit (everything else the same) resulted in premium savings of between 21% on the low end to 30% savings on the high end. LTC insurance carriers like couples and their premiums reflect it. So the next time you’re in a situation similar to the one above, show your clients a great idea on how you can save them money on their LTCi premium while at the same time giving a reluctant spouse some coverage too.

When a LTC Rate Increase Occurs, How You React…

Presented by Leonard Berthelsen Rate increases in any product line are never popular, nor are they a pleasant conversation with your client. Long term care insurance is especially difficult due to the fact that your client may be considerably older now than when they originally purchased their policy. That distance between purchase time and now present an ever challenging set of issues for both you and your client. Should I be proactive and address this right away with my client or do I wait for the news to leak out and maybe the client has calmed down before they actually get the rate increase notice? The prudent way would seem to me to address it with the client as soon as you can. It certainly is better hearing it from you than your client getting blind-sided by a news story or hearing about it through the grapevine. So what is that conversation going to be like? Well, short of your client going ballistic on you, level heads need to prevail. Most carriers offering long term care insurance or carriers that offered it in the past have gone through rate increases at least once. You may have become seasoned in how to handle it but many agents still struggle today on the best approach when rates go up. It is important to first remember this, you did not make these rates go up, your client did not make them go up and circumstances beyond both of you are controlling this. Market events certainly have been issues for the past 7-8 years. The interest rate that the carrier expected to earn on the invested premiums has not met policy design, utilization in some areas of the product have been higher than anticipated, and the simple fact that people are living longer and developing care issues that LTC was designed to cover is happening more frequently than what the product was priced for. Now that access to home care is so prevalent in our society, policyholders are accessing benefits earlier and receiving those benefits over a longer period of time, thus making the average claim higher. Yes, some of the older plans had designed persistency rates well below what was actually experienced that resulted in necessary rate increases. I do have to say though, if the plan was designed and built within the last 10-15 years, the persistency issue has been relatively the same, very high and quite probably not a reason anymore for the rate increase. So why the lesson in LTC history? How will you explain why the increase occurred and how will you make it understandable? I have gone through several rate increase actions with multiple carriers and my basic explanation remains the same. Reiterate the value of the plan, why they bought it and its value to them in current dollars. This gets your client back in the frame of mind of the product’s importance and the value proposition that convinced them to purchase it in the first place. I’ll create a quick premium comparison for each client demonstrating what the same plan at their current age would cost today and compare it to what they already have in place. This many times will defuse the notion of dropping it and shopping for something else. Rarely will the increased premiums on the existing plan be more than what currently is being sold. Many times the benefits will be stronger in their plan than what they can buy today. Once I have an understanding of the pure premium issue, I can move on to affordability. If this rate increase is going to put the premium out of reach or just more than what they are willing to spend for LTC, then I need to have the discussion about adjusting their current plan. In most cases the carrier will proactively give several “landing points” for the client to consider which generally means they are going to reduce benefits to keep the premium at a level that is acceptable. Not all benefit reductions are negative or bad. Maybe the client purchased it with inflation protection and it has grown to an acceptable daily/monthly level and they are okay with freezing it at that level. An easy solution to the problem. Some carriers will allow the reduction in the percentage of inflation protection as a means of reducing premiums. My conversation may need to go into possibly looking at reducing the duration of the benefit or other riders as a means of reducing premium. The main advice here is really very basic. Be proactive with your client when you know that a rate increase is coming. Start the conversation as soon as you know the facts. Understand the “landing points” that the carrier is offering and make sure that you restate the reason why they purchased the plan in the first place. The importance of long term care coverage for that policy owner is more important today than ever before, and the price is never going to be more affordable than it is right now. We all are getting older, living longer and in many cases dying slower with health related issues. Let’s just make sure that our clients are making the right decisions regarding the rate increase and for the right reason.