Where There’s a Problem – We Have a Solution

Presented by Deb Strong Do you have clients that are concerned with how they are going to pay for Long Term Care coverage?  If you do, you need to call your Sales Manager at Financial Brokerage at 800-397-9999.  We have many products that are protected by the Pension Protection Act, which means that structured properly, the long term care payments made to the client for their care are tax free!  One option is an annuity that also provides long-term care coverage, giving the client not only protection from the stock market, but also a leveraged pool of funds to use for care.  Nearly everyone buys insurance to cover their car and their home, as they should; own an asset and protect it.  So, think about this: A truly great financial plan can be put in place to grow assets with proper diversification, taxable and tax-free accounts, etc., but forgetting to put in place protection for those assets can be disastrous.  When one year of nursing home care can cost as much as $90,000, then how many years would it take to wipe out that well-crafted planning?  Don’t forget to discuss this fact with your clients and let us help you find the perfect product that transfers the risk of long-term care expenses where they belong . . . to the insurance carrier.
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

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.
Life Insurance

Six Questions for Six Life Insurance Sales to Seniors…

Presented by Brian Leising Do you have senior clients?  Did they purchase only one product from you?  Was it a Medicare supplement, annuity, long term care or final expense policy?  If you were able to uncover the need for one insurance product, could you uncover another?  What if you had six simple questions to ask your clients that would uncover additional sales? Once you have determined your client has the proper life insurance coverage, you should be asking them: “Have you protected yourself from the high costs of extended care should you become ill or frail as you age?”  The high cost of long term care is the greatest threat to a client’s retirement funds by far.  After a fall, the stock market bounces back, the elderly do not.  Long term care insurance has traditionally been used in this situation but is not a good fit for everyone.  Linked benefit/life insurance based long term care policies offer protection with guarantees not found in traditional policies.  The life insurance based solutions guarantee the client’s premiums will never change.  They also guarantee a benefit will be paid out.  If the long term care benefit is never used, the death benefit will pass to the insured’s heirs.  Your clients are not really protected until they have some form of extended care coverage in place. In part four, I will review a question to ask seniors who have their protection in place and have extra funds to leave to following generations.
Long Term Care and Disability Insurance

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.