Is Waiting for the Supreme Court’s Decision on the…

Presented by Leonard Berthelsen I often talk with agents like you and get varied opinions on how the Supreme Court will rule on the Affordable Care Act.  Are they going to rule in favor of the government regarding subsidies for the Federal Marketplace, or will the market be unsettled as a result of the decision?  We all speculate on what the decision is going to be, and of course have our own opinion on what should be the ruling. The end result is simply this, the decision has very little to do with whether our clients need life insurance, disability income protection or long term care insurance.  The need will still be there, regardless of what the decision is. Our task is to stay focused on what we can change, what we can do for our clients and how we can make a better life for those we touch every day.  It’s easy to get caught up in all the turmoil, all the discussion, but in the end we need to do what we do best, that is help our clients. We chose our profession because we wanted to help people, and that has grown into a passion for many of you.  Keep the passion burning, stay focused on what you can affect and you will find in the end that your clients are better off knowing you and working with you.

Is an Inflation Rider Critical to a Long Term…

Presented by Leonard Berthelsen I read with a smile on my face the news release by AALTCi regarding buyers purchasing less inflation protection on long term care plans in 2014.  The article stated that in 2014, the selection of the 5% inflation option on LTCi plans dropped from 51% to 14.5% in comparison to 2012 reported sales. The 5% inflation option has steadily increased in price to the point of making LTCi unaffordable for many consumers.  As a fall back, many agents just started quoting the 3% option that most carriers offered.  It certainly was less expensive but still high enough to dissuade many consumers from purchasing LTCi. Now I am not one to downplay the importance of benefit growth in a long term care plan, but there is another viable option that agents can consider.  It is simply called a “bulk benefit”.  We did an analysis of carrier rate increases about 3 years ago and looked at the plans that were subjected to rate increases and what benefits were included in those plans.  The commonality was long duration of benefit periods and the compounded inflation rider.  From that we looked to see what could be designed  into a long term care plan, have adequate benefits and still be affordable.  Hence, the “bulk benefit”. For example, take a couple aged 57 and 60 buying a $5,000 a month benefit with 5% compound inflation for a 5 year benefit duration. The cost from one of the top three carriers would be approximately $8,800 in annual premium.  Yes, unaffordable for most or they just aren’t interested in paying that kind of annual premium.  If you went with the 3% option, that premium would be approximately $4,850. Now look at the alternative foregoing inflation protection altogether.  Use a four year duration of benefits but design the plan at $10,000 per month.  You have doubled the benefit from the beginning and this is where your inflation protection is.  What’s the cost, approximately $4,900 annually. The crossover where the two designed plans will be equal to one another would be ages 72 and 75 for 5% compounded inflation and 78 and 81 with 3% compounded.  If the claim happened in the early ownership of the LTCi plan, certainly bulk benefit would be more desirable. Looking at life expectancy and the reality that most consumers don’t buy LTCi to cover 100% of the risk, this method starts to look attractive. We have to be aware that using this method of plan design takes the LTCi  Partnership out of the equation.  That has to be part of the conversation with the client.  Significant assets many times make the Partnership a non-issue but the conversation needs to be conducted with the client.  The purpose of DRA Partnership was to get more consumers to purchase private LTCi coverage and this model makes it a bit more affordable. When fully explained and a review of all the options and a premium comparison is completed, we see clients opt for the bulk benefit more often than not.   Having immediate large benefits versus the traditional and now more expensive long term care plan with that slow growth makes sense to a lot of consumers.  These are reimbursement policies, so if the entire benefit isn’t used in a given month, the remaining pool is available for future delivery.  It just makes sense to a lot of potential clients.

Are You Ready to Embrace the Future of Long…

Presented by Leonard Berthelsen I usually try to stay away from being company specific or naming products in my writings, but sometimes you have to do it when something new comes along. New generations of bold thinking are at the doors of LTC planning and design. It really was only a matter of time before LTC carriers used creative thinking and a new fresh approach to product design to offer new insurance products to the marketplace. John Hancock introduced Performance LTC™ to the industry in April and has already seen successes with this new approach.  “The boldest ideas of new generations are infused with creative thinking and fresh perspectives, while preserving the finest traditions of the past” is how Hancock is explaining their thinking with this new long term care solution for the agent and their clients. Hancock’s press release states “Performance LTC™ offers a breakthrough design that will provide your clients with many of the features found in a traditional policy, while offering a more predictable customer experience. This new LTC insurance solution allows your clients to make informed decisions about their coverage so it can evolve over time to meet their financial needs and goals.” Anything addressing the rising premium issue of late is welcome news. This is a good start.  While it may not be the solution to every issue affecting the buying decision consumers face in considering long term care coverage, it does address several key components. A lower “buy in” point from the beginning along with modest, controlled adjustments over the life of the contract may just reduce some of the risk of heavy rate adjustments later.  The policyholder will have a larger stake in how the plan performs over time and that should be welcome news for producers and consumers who have shied away from LTC in recent years because of the uncertainty of the product. Take a look at Hancock’s new product as I think this is a start of the creative thinking and fresh approach we’ve been looking for.

Emphasizing Disability Income Awareness is more than just One…

Presented by Leonard Berthelsen May is designated as Disability Income Awareness month and much of the focus is given to presenting, selling and educating clients during the month.  Let’s take that sharp focus from May and extend it throughout the year. Your client’s need for protection is there throughout the year, not just in a one month ad campaign.  Sickness and accidents aren’t just confined to one month but are present all year long. Disability Income protection should be at the forefront of every discussion with our clients to talk about their exposure and how you can reduce the risk.  Why, because all the other “stuff” that we talk about, sell or convince a client to buy becomes secondary if they can’t afford to continue paying the premiums when they become disabled. We write many times in these blogs about theory and process but rarely about how the personal side of things affects our loved ones.  Let me share a quick story with you about one of those personal issues. A 37 year old man was having lunch with his 3 year old daughter at her daycare when he became flushed and dizzy.  Making it through the lunch he returned to his car with the air conditioner on to cool off.  A passer-by tapped on his car window to see if he was okay, he had passed out. This 37 year old man had just suffered a stroke.  The quick and smart thinking of a passer-by probably saved his life.  In intensive care, he was informed that most likely he had a small clot that entered his brain.  With medication and some intense physical and occupational therapy, he will gain full control of his arm once again.  Who would be concerned of this happening at this age?  We never know when, where or why, but disabilities happen all the time to all kinds of people. Having the right protection can and will make all the difference in the world.  Just make sure that your clients are protected. Oh, by the way, this 37 year old man is my son.  Yes, he did have Disability Income Protection!

Taking Care of Our Fathers’ Generation

Presented by Leonard Berthelsen It’s now been six weeks since the loss of my good friend who suffered in his later years with the debilitating effects of Alzheimer’s.  I have reflected often over these six weeks about his life; the energy, the vibrant personality and the zest for life that he had until that final year.  It is so sad to see the effects of this disease and what it drains from a person right before your eyes. My friend was married, had two wonderful children and three grandchildren.  He always had a smile on his face, teased people immensely and was forever volunteering to help others –   exactly what you would want in a friend, father, grandfather and husband.  As his generation takes their final journey, I find myself asking “Are we taking care of our fathers’ generation as well as we can?” So what does this have to do with insurance, or the profession we decided to make our life’s work?  We have the opportunity AND responsibility to make sure that the final journey is as smooth as possible without the pitfalls that come from the financial crisis that comes far too often to so many people who have not planned for the final journey of life. In the weeks leading up to my friend’s death, I was visiting with his wife about some of the financial issues she was experiencing and she told me, “I don’t know what I would have done if we didn’t have long term care insurance.”  He was in a specialized memory care facility with others experiencing that same final journey.  He stayed in that care facility for nearly two years.  The final year he experienced difficulty remembering people and names, but yet still maintained his sense of humor and love for his family. I have been in this business for over 30 years and have had a lot of clients experience similar journeys – and it is never easy with any of them.  My comfort comes from knowing that I did what I could to make that journey a little less painful and a little less stressful without it becoming a financial crisis. Are you taking care of our fathers’ generation?  Are you doing everything that you can to make that journey less painful?  Are you providing the guidance that your clients so desperately need? Ask yourself these questions.  Maybe it’s time to refocus on our mission and help others with that final journey.