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 6 – Payment amount Insurance companies use two primary methods to determine the benefit amount paid to your client. The payment amount will be either based upon a known figure up front, or will be determined at claim. If there is no cost for the extended care rider up front, charges are assessed at the time of claim. In this scenario, the company will set a maximum acceleration amount available to the client. The client may elect to request that entire amount or a lesser amount. The carrier will then base their charges on the client’s life expectancy and current interest rates. For instance, they may determine the client has a life expectancy of five years. They will take the dollar amount requested, calculate the interest they would expect to earn on that money over the next five years, and then subtract that amount from the client’s benefit as their fee. With this type of payout calculation, it is impossible for a client to know exactly how much money they will receive until they actually file a claim. This works well for clients who absolutely will not pay for a feature they believe they will never use as there is no upfront cost for this type of rider. If there is a charge up front for the rider, the benefit will be a known number. Most carriers express the monthly benefit as a percentage of the face amount. 2% is common, but some offer 3%, 4% or the full Federal per diem amount as the monthly benefit. At least one company allows the client to name a specific dollar figure on the application. This method gives the client the ability to know exactly what to expect upon filing claim. Look for Element 7 – Payment Method in July.
Long Term Care and Disability Insurance

Are Commission Eliminations a Trend for Us to be…

Presented by Leonard Berthelsen There has been a lot of talk and many articles in our trade publications about carriers suspending commission payments for open enrollment in the Affordable Care Act (Obamacare). Is this a trend that the industry needs to pay attention to, or is it affecting just this specific kind of insurance? Interesting to ponder, are you going to lose any sleep over it? I suspect that if you are one of those agents that work in this market, you are concerned about the future. Are they going to expand that to all under 65 major health products, or is it contained in a small amount of the overall business? There are pros and cons with the Affordable Care Act and many differing opinions on it’s success. There is no doubt that many more Americans are insured today than at any other time in our country’s history. Medicaid expansion has added thousands if not millions of additional covered Americans in addition to the newly insured under the ACA. Regardless of which side of the aisle you sit on, these facts can’t be disputed. What does get disputed is what effect it has on the other forms of insurance available to consumers. Most of the carriers participating in the ACA have given dismal reports for the last 2 years on premium collection, insured retention, and overall claims experience. It is not a disputed fact that the majority of carriers are paying more out in claims than what they are collecting in premiums from the open enrollment section of the ACA. How long will that trend continue? Time will certainly tell. These same carriers that are reporting significant losses in the ACA open enrollment are looking for all means to “right the ship”, unfortunately, commissions got caught up in that correction. It appears that this commission suspension is an anomaly at this point and not a concern for panic with regard to the other health related products out there. Should we ignore what is happening to commissions in this group, certainly not. As a prudent business person, we all have to stay sharp to market trends, carrier actions and regulatory concerns. At this point, the carriers need the individual producer as much as the producer needs them. Very few of these carriers have a direct to consumer mentality or a mechanism to take their overall business straight to the consumer. So for the short term, insurance advisors are still needed by the carriers, the consumers and the families they support. If you have sold in this environment and it affected you financially, let the carrier and the regulators know this. The only way that they are going to know what effect this is having on your livelihood is if you speak up. Marketing Long Term Care, Disability Income Protection, Short term care and other individual products may be the solution to the shrinking compensation that the carriers imposed on the ACA. Let’s remain strong in the other individual product lines and demonstrate that our profession is truly needed. Reach out to Financial Brokerage at 800-397-9999 for additional information on this subject.
Life Insurance

The Eight Elements of Extended Care Riders – Finding…

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 5 – Elimination Period The elimination period is the amount of time an insured has to wait for benefits after qualifying for them. Put yourself in the insured’s shoes, if you qualify for benefits, why would you have to wait to receive them? Despite this disconnect between consumer expectations and company practice, most policies contain a 90 day elimination period. Some have a shorter period for home health care and only a very few offer clients benefits immediately upon qualifying for claim. Look for Element 6 – Payment Amount in June.