Long Term Care and Disability Insurance
Long Term Care and Disability Insurance
Long Term Care and Disability Insurance
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.
Long Term Care and Disability Insurance
Emphasizing Disability Income Awareness is more than just One…
Presented by Leonard Berthelsen May is designated as Disability Income Awareness month and much of the focus is given to presenting, selling and educating clients during the month. Let’s take that sharp focus from May and extend it throughout the year. Your client’s need for protection is there throughout the year, not just in a one month ad campaign. Sickness and accidents aren’t just confined to one month but are present all year long. Disability Income protection should be at the forefront of every discussion with our clients to talk about their exposure and how you can reduce the risk. Why, because all the other “stuff” that we talk about, sell or convince a client to buy becomes secondary if they can’t afford to continue paying the premiums when they become disabled. We write many times in these blogs about theory and process but rarely about how the personal side of things affects our loved ones. Let me share a quick story with you about one of those personal issues. A 37 year old man was having lunch with his 3 year old daughter at her daycare when he became flushed and dizzy. Making it through the lunch he returned to his car with the air conditioner on to cool off. A passer-by tapped on his car window to see if he was okay, he had passed out. This 37 year old man had just suffered a stroke. The quick and smart thinking of a passer-by probably saved his life. In intensive care, he was informed that most likely he had a small clot that entered his brain. With medication and some intense physical and occupational therapy, he will gain full control of his arm once again. Who would be concerned of this happening at this age? We never know when, where or why, but disabilities happen all the time to all kinds of people. Having the right protection can and will make all the difference in the world. Just make sure that your clients are protected. Oh, by the way, this 37 year old man is my son. Yes, he did have Disability Income Protection!
Long Term Care and Disability Insurance
DISABILITY INSURANCE SOLUTIONS FOR DIFFICULT OCCUPATION CLASSES
Presented by Donna Ries All occupations have a need for income protection, but some occupations may be more difficult to insure with certain carriers for disability insurance than others. Two occupations in particular, which have a wide interpretation of DI coverage, are Chiropractors and Paramedics or Emergency Medical Technicians (EMT). Chiropractors are viewed differently by DI carriers; some are willing to insure them, others are not and even others offer limited benefits. The nature of their occupation is considered risky by both claim experience as well as the physical demands of the job. Having to adjust their clients by lifting, bending and physical contact with their clients is considered a manual profession. In a worst case scenario, some DI carriers would not even consider insuring a Chiropractor. There are other DI carriers that would insure up to a two year benefit period and still others that would offer a Chiropractor a five year benefit period. So when we think this profession might be one to avoid when considering DI protection, take another look and you might just be surprised. There is even more diversity in coverage choices available for a paramedic or EMT. At worst, one DI carrier would not consider this profession for coverage, yet another DI carrier would consider for short term disability only. There are also DI carriers that would offer a two year benefit and another carrier all the way out to age 67. With physical exertion and initial patient contact, yes there is increased risk but still insurable. The point is that Financial Brokerage offers multiple DI carriers and solutions for both of these occupations and many more. With the diversity between multiple DI carriers, you can count on Financial Brokerage to find which carrier would best meet your client’s needs. Give these occupations some consideration and give your DI Sales Manager at Financial Brokerage a call at 800-397-9999. I think you will be pleased by the outcome.
Long Term Care and Disability Insurance