Long Term Care and Disability Insurance
Long Term Care and Disability Insurance
Long Term Care and Disability Insurance
Long Term Care and Disability Insurance
Providing LTC Coverage for an Uninsurable Spouse
Presented by Tim Dreher Long Term Care awareness month is November and I wanted to expand on my last blog where I wrote about adding an insurable spouse/partner to take advantage of the substantial discounts that the carriers provide. In most cases the combined premium when adding the spouse/partner at minimum benefits, is less than if the one applied for coverage by themselves. So what can be done in a situation where a spouse/partner is uninsurable? This can be a challenge to even the most seasoned producer. Many times the prospect will abruptly end the conversation when it is determined that there is an uninsurable spouse/partner.It is important to point out to the prospect that what we see frequently happen, is the healthy spouse/partner becomes the care giver for that uninsurable spouse/partner. Many times that can happen much sooner than what anyone anticipated. As a result of being that caregiver, the health of the insurable spouse/partner declines rapidly due to the stresses of being that caregiver. It has been reported that up to 60% of caregivers were unprepared for the physical demands of being that caregiver.1 There is probably not a better argument for the healthy spouse/partner to consider and purchase LTCi.
Mutual of Omaha’s MutualCare LTCi policy has a very unique rider, called the Security Benefit Rider that can be added to an LTC policy to provide a solution for just such a situation. If the insured spouse/partner requires long term care services after the policy is in effect, the Rider can be activated to provide additional funds to help pay for the cost of providing care for the uninsurable spouse/partner. Up to 60% of the insured’s monthly reimbursement benefit is made available to help pay for approved care for the uninsured spouse/partner. There is no medical underwriting required for this Rider, and the additional benefits paid out for the approved care do not reduce the insured’s policy limits. It is a separate benefit for an uninsurable spouse. Unfortunately, there will be times when a producer will find themselves in a situation where couples/partners apply for coverage and one is declined. When this happens, we often will hear “If we both can’t get it, than we don’t want it”. You might want to consider this rider, as it might just be the answer to saving the sale. This unique feature when understood, can be a great relief for uninsurable spouses/partners. Talk with one of the LTCi marketing specialists at Financial Brokerage about more details on how this rider works.- Transamerica LTC study 2015
Long Term Care and Disability Insurance
Insuring a Spouse For Free with LTCi, (well almost)
Presented by Tim Dreher Nearly every day while working with insurance producers, I get a request to run an LTCi illustration for an individual quote for a person whom is either married or has a domestic partner. In these situations, I always ask why we are not quoting the other spouse/partner. The answers that I normally hear are either the spouse/partner is uninsurable or that the other spouse/partner is just not interested in purchasing LTCi. I have noticed that the majority of these situations is a wife wanting LTC protection and a husband that either does not see the need or doesn’t want it because “I’ll never need it, I’ll drop dead first”. Let’s face it, most caregivers in a long term care situation are women whom have seen it happen to a friend or maybe have even been a caregiver themselves and understand the value and need for LTC insurance. Many of the LTC carriers we work with at Financial Brokerage offer a substantial discount for couples or domestic partners when both apply for coverage. In those cases where the spouse/partner is insurable, I will suggest adding the spouse/partner to the quote at the minimum benefits available in order to take advantage of the spousal/partner discount. It has been my experience that adding the spouse/partner at the minimum benefits results in a premium that is less for both spouses/partners than the cost for a policy where only one is applying. For example, let’s look at a couple, female and male, both age 55, looking at a plan with a $5,000 per month benefit for her, 5 year benefit duration, and a 90 day elimination period with 3% compound inflation protection where the female wants coverage but the husband does not. I ran the illustrations with 3 of our most competitive carriers. By adding the husband at minimum benefits ($1,500 per month for 2 years, with a 90 day elimination period and no inflation) the resulting savings were between 13% up to a whopping 37% savings over the price of quoting the female only. That is giving the benefit quoted above for the female spouse and the male (at minimum protection) for under the premium of what it would have been for her plan only. The savings for a 3 year benefit (everything else the same) resulted in premium savings of between 21% on the low end to 30% savings on the high end. LTC insurance carriers like couples and their premiums reflect it. So the next time you’re in a situation similar to the one above, show your clients a great idea on how you can save them money on their LTCi premium while at the same time giving a reluctant spouse some coverage too.
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.
Annuities