The Eight Elements of Extended Care Riders – Element 7 – Payment method

Presented by Brian Leising

inding 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 7 – Payment method

Insurance companies pay extended care benefits via one of two methods: reimbursement or indemnity. With the reimbursement model, the company either pays the insured’s health care providers directly or reimburses the insured upon proof of care expenses. The indemnity model offers the client a lump sum payment without having to provide an exact accounting of expenses. The insured may use the money however they wish. Some extended care expenses may fall outside the realm of traditional services. Maybe they wish to compensate a neighbor or loved one for providing care. The money could also be used to fly a loved one across the country, or for their hotel and meals while visiting. If the clients’ expenses fall below the indemnity benefit, they could request a lesser amount, save or invest the extra dollars.

Look for Element 8 – Inflation in August.

“Mailbox Money”

Presented by David Corwin

Living too long is a risk that many seniors are faced with today.  Studies show that a 65 year-old man has a 34% chance of living to age 90 and a 17% chance of making it to 95. A 65 year-old woman has a 44% chance of living to age 90 and a 23% chance of reaching 95.  These longer life spans present wonderful blessings, but difficult challenges with the real risk of running out of their savings they have worked a lifetime to create.

Annuities can provide a lifelong check directly to their “mailbox” to help mitigate the risk of running out of money. I can help you position one of the products below to best fit your client’s needs:

  • Single premium immediate annuity (SPIA) – this annuity offers an income for life or a certain period of time to be paid out.  Often a good fit to cover the time between retirement and social security payments (and other scenarios), but the client does give up “control” of the lump sum asset in return for a potentially larger payout than other types of annuities.
  • Fixed annuity – this annuity still gives the client 100% control over the asset, which means they can withdraw money as needed, but how long it lasts is dependent upon withdrawals and interest gained on the contract.  Generally speaking, 10% penalty free amounts are withdrawn so additional fees and charges aren’t incurred.  The drawback would be that income will not last for life, unless annuitized, which of course forces the annuitant to give up control of the asset.
  • Income rider – this is a rider that is available on most indexed annuities.  These seem to be the most popular because many contracts guarantee a future result. The client still has complete control of the asset while also knowing they can have “mailbox money” for life.

Please call David Corwin at 800-397-9999 and let me help you fit your client’s needs.

The Eight Elements of Extended Care Riders – Element 2 – No-lapse guarantee

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.

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.

  1. Transamerica LTC study 2015

Tripler Benefit

Presented by Deb Strong

We all have clients that will need additional income now or who can wait a little later.  One thing we might hear from our clients is that they do not want to pay a fee for having this option available to them.  We have a rider that can offer your client a 5% rollup for up to 20 years while they wait to turn on income.  This rider also has a Tripler Benefit.  If your client goes into a qualified care facility, it will “triple” the income for 5 years!! I know in the state of California it’s hard to find these options approved for sale, but this one is approved.  Please call Deb Strong at Financial Brokerage today at 800-397-9999 and ask for details.