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 1 – Payment frequency
Life insurance policies with extended care benefits come in single-pay or multi-pay varieties. The single-pay plans were the first life insurance based extended care plans on the market. Clients pay one lump sum into a modified endowment contract (MEC) which is leveraged to purchase a death benefit and a long term care (LTC) benefit. In many situations, the death benefit approximately doubles the lump sum and the total long term care benefit nearly triples the lump sum. This policy design works well for clients with money already set aside to “self-insure” their extended care risk. Potential clients for multi-pay policies comprise a much larger market and account for most sales. These are funded with recurring (annual, semi-annual, quarterly, monthly) premiums and are an affordable option for clients who are used to paying for all their insurance policies (auto, homeowners, traditional LTC, health) in this manner.
Look for Element 2 – No-lapse guarantee in February.