Life Insurance

The Eight Elements of Extended Care Riders – Element…

Presented by Brian Leising Finding the right formula for each client Not all extended care riders on life insurance policies are created equally. Do you know the differences? Different combinations will appeal to different clients more than others. Here are eight of the major distinguishing features among insurance companies offering extended care riders. All include some combination of the eight elements. This allows you to find the right formula for each client.
Premium Payments Benefit Qualification Benefit Amount
Pf Payment Frequency Pa Payment Amount
Lg Lapse Guarantee Tc Tax Code Pm Payment Method
Wp Waiver of Premium Ep Elimination Period If Inflation
Element 3 – Waiver of Premium Most insurance companies waive premiums while the insured is on claim and qualifying for benefits under an extended care rider. However, some still require premiums to be paid and others waive only the premium for the extended care rider, not the base life insurance policy. If the premium is not waived, a client could continue to pay premiums from the same resource they have always used or redirect part of their extended care benefit to pay the premium. This could pose a problem if the cost of care greatly exceeds their policy benefit and they have to use their own funds. Most clients will expect their premiums to be waived upon filing a claim. Look for Element 4 – Tax Code and Benefit Qualification in April
Life Insurance

The Eight Elements of Extended Care Riders – Element…

Presented by  Brian Leising Finding the right formula for each client Not all extended care riders on life insurance policies are created equally. Do you know the differences? Different combinations will appeal to different clients more than others. Here are eight of the major distinguishing features among insurance companies offering extended care riders. All include some combination of the eight elements. This allows you to find the right formula for each client.
Premium Payments Benefit Qualification Benefit Amount
Pf Payment Frequency Pa Payment Amount
Lg Lapse Guarantee Tc Tax Code Pm Payment Method
Wp Waiver of Premium Ep Elimination Period If Inflation
Element 2 – No-lapse guarantee One of the primary reasons clients give for purchasing life insurance-based extended care plans over traditional extended care policies is the fact their premium will never change. As a health insurance product, traditional LTC polices are subject to rate increases. Good luck keeping your clients happy when they receive a rate increase notice of 50% or more! With a no-lapse guarantee universal life or a whole life based contract, your clients never have to worry about future rate increases. Everything is in their control. If they pay their premiums on time, every time, take no loans or withdrawals, their premiums are guaranteed to remain level. Some companies also offer life insurance without guarantees for their extended care riders. These need to be monitored regularly to ensure they maintain enough cash value to remain in force. Look for Element 3 – Waiver of Premium in March.
Life Insurance

The Eight Elements of Extended Care Riders – Element…

Presented by Brian Leising Finding the right formula for each client Not all extended care riders on life insurance policies are created equally. Do you know the differences? Different combinations will appeal to different clients more than others. Here are eight of the major distinguishing features among insurance companies offering extended care riders. All include some combination of the eight elements. This allows you to find the right formula for each client.
Premium Payments Benefit Qualification Benefit Amount
Pf Payment Frequency Pa Payment Amount
Lg Lapse Guarantee Tc Tax Code Pm Payment Method
Wp Waiver of Premium Ep Elimination Period If Inflation
Element 1 – Payment frequency Life insurance policies with extended care benefits come in single-pay or multi-pay varieties. The single-pay plans were the first life insurance based extended care plans on the market. Clients pay one lump sum into a modified endowment contract (MEC) which is leveraged to purchase a death benefit and a long term care (LTC) benefit. In many situations, the death benefit approximately doubles the lump sum and the total long term care benefit nearly triples the lump sum. This policy design works well for clients with money already set aside to “self-insure” their extended care risk. Potential clients for multi-pay policies comprise a much larger market and account for most sales. These are funded with recurring (annual, semi-annual, quarterly, monthly) premiums and are an affordable option for clients who are used to paying for all their insurance policies (auto, homeowners, traditional LTC, health) in this manner. Look for Element 2 – No-lapse guarantee in February.