Is an Inflation Rider Critical to a Long Term Care Plan?

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.

Critical Illness Insurance for the Small Business Owner

Presented by Tim Dreher

What kind of an illness or injury would it take to keep a small business owner at home and away from their business?  A bad case of the flu or a broken arm, probably not.  Most business owners got where they are today by being diligent hard workers who have shown up every day to get the job done.  It would take something more than a little illness or injury to keep them at home.  However, an event such as a heart attack, stroke or a cancer diagnosis probably would.

Critical illnesses are striking more Americans every single year.  Some 1.4 million Americans are diagnosed with cancer (American Cancer Society) annually.  An estimated 785,000 Americans will have their first heart attack and some 600,000 Americans will experience their first stroke (American Heart Association), and with new advances in medicine, the vast majority will survive.

The financial consequences of surviving a critical illness are something few people are prepared for.  A lot of the cost associated with caring for someone with a critical illness is covered by most health insurance plans.  But approximately 67% of all costs associated with a heart attack, cancer and stroke are non-medical costs.  Also, most high-deductible health plans have deductibles and co-pays that can easily run into thousands of dollars and yet they would still need to continue to pay their premiums.

Suggest purchasing a Critical Illness policy.  This specialized insurance provides a lump-sum, tax-free payment upon diagnosis should a policyholder suffer from certain specific critical conditions.

What a difference a cash payment of $10,000, $25,000, $50,000 or even $100,000 would make to a client when their covered condition is diagnosed.

The money could be used to:

  • Pay off a mortgage, or just make the monthly mortgage payments, credit card debt or other loans
  • Supplement lost income as a result of waiting periods, elimination periods or deductibles
  • Find alternate medical treatment that may normally not be covered by most health insurance plans such as experimental treatments
  • Make modifications to their home in order to accommodate different health conditions
  • Or even just to take some time off to heal and not have to worry about their business but instead concentrate on getting well again.

Having a lump sum payment from a critical illness plan paid to your client just might make the difference of the business surviving.

Contact your Critical Illness marketing specialist at Financial Brokerage at 800-397-9999 to get additional information about this highly important form of protection.

Help your Clients Understand the Financial Pitfalls of a Major Illness even if they have Health Insurance

Presented by Leonard Berthelsen


Most consumers would be hard-pressed to explain what their real out-of-pocket costs would be if a major health issue occurred.  Deductibles, co-pays, primary doctor vs. specialist, generic vs. name brand are just a few of the costs and decisions that come up.  Then there are those expenses not really talked about or covered in their health plan such as travel, lodging, experimental drugs and procedures, not to mention time off work.

Critical Illness and Cancer/Heart Attack/Stroke coverage can be a tool that financial professionals use to bridge the gap created by these out-of-pocket expenses.  Having a lump-sum check arrive while your client is undergoing cancer treatment or recovering from a heart issue can be a huge relief to them and their families.

As their health plans have increased deductibles and co-pays in order to keep premiums down, this results in only “kicking the can down the road” because eventually the cost is going to come back to your clients in the form of payments for those higher deductibles and co-pays.

Many people have limited disability coverage at work, if they have it at all, and it may only pay a portion of their salary or wages.  That loss of income potentially poses a huge financial risk to your client.  Having a critical illness plan can soften the blow from reduced or stopped paychecks.

Critical Illness and Cancer/Heart Attack/Stroke coverage can be tailored to your clients’ exposure and are designed to have affordable premiums.  In addition, they potentially will pay for those expenses not covered by their health insurance plan.  These products have limited underwriting and great compensation.

Contact your Financial Brokerage Sales Manager today at 800-397-9999 to find out how Critical Illness and Cancer/Heart Attack/Stroke coverage can help your clients weather the financial risk from a health crisis!

Have you asked unsettling questions that may be vital for your next Critical Illness sale?

Presented by Donna Ries


No one likes to think about purchasing Critical Illness insurance whether it be for personal or business reasons.  Learning how to ask alarming questions may help your prospects realize the need for coverage.  Critical Illness coverage gives you another opportunity to get in front of your existing clients.  Using these powerful techniques called “disturbing questions” will help your prospects see the problem.

View Ken Smith’s, Assurity Life Director of Health Product Sales, brief video blog on Critical Illness and Disturbing questions.

Mr. Smith points out how Critical Illness insurance can be a solution for business owners.  He has examples of how to ask disturbing questions to identify the problem, then use stories to present the solution.  As he states, “It’s not about the product, it’s about what the product does” that may lead to Critical Illness sales.   Contact your Financial Brokerage marketer today at 800-397-9999 to help you with your next Critical Illness prospect sales solution.

Protection for the stay-at-home spouse?

Presented by Donna Ries


Few carriers allow disability income insurance protection for the homemaker due to lack of income.  Another alternative to consider is a critical illness plan.

In the case of a major event such as cancer, heart attack or stroke, a lump sum payment may help the family cope with such a situation.  To qualify for critical illness, there is typically limited income restrictions, limited occupational analysis and an easy solution to a huge potential financial burden on the family.

The hidden cost of major health crisis is something we don’t give much thought to.  Transportation, housing and time off of work all become big issues if care is being received away from where a person lives.  Health insurance policies don’t pay for the non-medical cost of care.

“Cancer, heart attacks and strokes happen at all ages and most people are not prepared for either the emotional or financial cost,” explains Jesse Slome, Executive Director of the Industry Trade Organization.  “Nearly two-thirds of U.S. bankruptcies are the result of medical expenses and 78 percent of those filing for bankruptcy had health insurance when they were first diagnosed.”

A lump sum payment may be the answer to help the affected spouse to concentrate on recovery.  Your Financial Brokerage marketer is here to help you place more of this business.  Give us a call today at 800-397-9999 to discuss the plans available.