Long Term Care and Disability Insurance

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.
Long Term Care and Disability Insurance

Using the Affordable Care Act to your Advantage

Presented by Leonard Berthelsen It really doesn’t matter which side of the fence you’re on when talking about the Affordable Care Act (ACA). There are opportunities for just about everyone in our business. If you sell individual major medical coverage, you’ve probably found a way to embrace the new way of selling and dealt with the challenges that go with it. On the other hand, you may be one of those producers that say, “I’m certainly glad that I’m not in the major medical market so I don’t have to deal with all those changes”. There are challenges with every decision as well as opportunities. With individual major medical coverage being offered through the ACA, many of these clients have affordable health insurance for the first time, especially if they are receiving a subsidy from the government for their premiums due to their income. They also found that they can qualify for the first time without their health being an issue. Unfortunately many are finding out the hard way that although their premiums are more affordable, the deductibles and co-pays required by these plans create high out-of-pocket costs. With the caps on these plans being $6,600 and $13,200 for an individual and family respectively, the question becomes how are they are going to pay for it. This is where you come in. Don’t walk away from a discussion with a prospect that says they have their health insurance taken care of. Explore a little deeper with that client. Is it coverage being provided at work or is it an individual plan, what are the deductibles, what are the copays, what will it cost the family in out-of-pocket expenses? Products like, Critical Illness, Cancer Heart Attack Stroke plans, Accident coverage, Per Diem Benefits for Hospitalization and Intensive Care are all products that can fill that gap. In some respects, we are going back to the early 1980’s before Major Medical coverage for individuals was being discussed. The industry was selling Accident, Hospitalization, Medical/Surgical plans along with limited Disability Income protection as a means of plugging gaps that a client would have in respect to health coverage. As we close in on another open enrollment period with the Affordable Care Act, keep the above in mind. You can do great things with these supplemental products for your clients but you have to have the conversation with them.
Life Insurance

The Greatest Threat to Retirement Assets

Presented by Brian Leising

(HINT: It’s not the stock market!)

How many of your clients have protected their assets from the greatest threat they face in retirement, the high costs of extended care? What happens to clients and their families with no protection from this risk? What excuses do clients give for not taking action and protecting their assets? What do consumers have now? Right now most people don’t have a plan at all. Some have traditional long term care insurance (LTC) policies, and others have personal funds set aside for LTC expenses. What’s wrong with that? Whether clients think they have a plan or not, they have a plan. No plan is a plan. That means they will use their own money until it runs out and they go on welfare (known by the fancy name Medicaid), leaving nothing for their spouse and children. Consumers state one of two objections to purchasing traditional LTC policies: 1) “The rates may go up”; or 2) “What if I die and never need to use my policy? I don’t want to waste my money. “ Even those with money set aside are not leveraging their funds as much as possible. What’s a possible solution? Linked-benefit life insurance policies allow clients to use their death benefit to pay for LTC expenses. The rates are guaranteed and premiums are never wasted as the full benefit is always paid to someone, themselves if they require care or their heirs if they don’t. In lump sum situations, you can double the money to heirs and triple that sum for LTC, with a return of premium option. Now you can protect your clients’ assets from the greatest threat they face in retirement; by showing them how their life insurance policy can be used for extended care expenses; so they don’t have to worry about rate increases or “wasting” premium dollars.
Life Insurance

MYTH: “I won’t need life insurance when I retire.”

Presented by Brian Leising

Four responses you can use with your clients.

3- Really? So, that means you will be a statistical anomaly and won’t need extended care services?

According to AALTCI, over 70% of Americans over age 65 today will need some form of extended care services before they die. Most life insurance companies now offer policies that perform two functions, they pay a death benefit when you die and a living benefit when you require long term care services. Retirement plans diminish quickly when long term care expenses are withdrawn in addition to regular living expenses. Since hybrid plans are so readily available, why pay for separate policies when you could have two plans in one?

See response #4 next week.

Long Term Care and Disability Insurance

A Debate Between Traditional Long Term Care Insurance and…

Presented by Leonard Berthelsen There seems to be quite a debate being waged between traditional LTC products and the hybrids of life and annuity products.  The positive of this is the attention long term care is receiving. I read comments like “I’ll lose it if I don’t use it”.  Yes, there is statistical chance that a client would pass away and not use the product’s benefits with the traditional LTC products.  However, I don’t believe there actually is a large statistical chance especially with long life expectancy and the utilization of home and community care services in a traditional LTC product.  Also, these plans now allow the untrained friends and family care providers to be paid for these services from the policy by many of the carriers.  When all is considered, access to long term care services will probably increase. Yes, asset based LTC products offer a” lock in” when purchased and there would be no future rate increases with that product.  For some consumers, this is desirable.  For many other potential clients, the single premium deposit or purchase is just not in the retirement plan.  Moving a large block of money to have dedicated to LTC coverage certainly is not for everyone.  In certain situations, does the client understand that the first money to get used in a hybrid annuity long term care claim is their own deposit? Traditional LTC products and carriers have a much better understanding of claims, costs, and morbidity than they did five years ago and certainly better than 25 years ago.  Only time will tell if the carriers have it right.  When financial planners and advisors design plans for their clients using traditional LTC products, there are certainly options in those plans that reduce the risk of future rate adjustments. I have even seen comments that there is a concern that when benefits are drawn from a LTC plan, those benefits would be taxed.  Since 1996 when tax qualified LTC plans became part of the LTC insurance landscape, these benefits have been paid tax free.  In the 1995 legislation that gave us tax-free LTC benefits, it also made all plans sold prior to 1996 grandfathered and treated as if they were tax qualified.  This issue has become somewhat of a lightning rod for justifying one design plan over the other. I’m not an advocate for one over the other, they both have their place.  Advisors should recognize that clients have different needs, just as we have different products for those needs.  One is not at the expense of the other.  Both designs can co-exist and both plans can flourish.