News Items
 

Medicareful®, a Centers for Medicare & Medicaid Services (CMS)-approved Medicare product comparison website, added six prominent carriers to its online enrollment platform for the 2017-18 Medicare Annual Enrollment Period.

With its latest release, Medicareful now features online enrollment for Aetna Medicare Advantage (MAPD) and prescription drug plans (PDP), Coventry (MAPD), Humana (MAPD), CarePlus (MAPD), Anthem (MAPD and PDP), Amerigroup (MAPD), and Independence Blue Cross (MAPD) plans. These additions join Humana (PDP), SilverScript (PDP), Excellus BlueCross BlueShield (MAPD), and Univera Healthcare (MAPD) as plans available for direct enrollment online.

“With the addition of these carriers, Medicareful has enrollment options for plans which cover 42% of all Medicare beneficiaries that have chosen an MAPD or PDP plan,” Ritter Insurance Marketing President Craig Ritter said. “This greatly increases the utility of this platform for our agents.”
Using a licensed sales agent’s unique Medicareful site, Medicare beneficiaries can contact their agent and enroll in select plans. All online enrollments are tied directly to the agent for commission credit.

“Medicareful is designed to enhance every aspect of the agent’s workflow: marketing, plan selection, enrollment, and retention. It’s much more than a simple enrollment tool,” Ritter said. “Agents can manage all of their referral, lead generation and co-marketing sources through one platform to maximize their customer base. Streamlining the scope of appointment and enrollment processes through Medicareful enhances our agents’ effectiveness during the Annual Enrollment Period.”

Through technology developed by Ritter Insurance Marketing, Medicareful validates the agent’s certification status, state licenses, and state appointments to ensure compliance with CMS’ “ready to sell” regulations. Once this instant validation is complete, a Medicare beneficiary can complete the enrollment process in less than 10 minutes without leaving Medicareful. Agents immediately receive an email confirmation, and the beneficiary also gets a confirmation that their enrollment has been sent to the health plan or Part D sponsor for processing.

Medicareful’s revolutionary eSOA is now more powerful than ever for licensed agents. In 2018, CMS relaxed the rules for a Scope of Appointment (SOA), the document that verifies a Medicare beneficiary’s consent to a sales appointment from their agent. The new guidelines allow agents to assist their clients from SOA through presentation to enrollment using a single phone call.

Medicareful’s eSOA enables contracted agents to compliantly document their Medicare appointments on their website. The electronic copy of the eSOA is retained in the agent’s CRM and the agent can electronically sign for submission to any Health Plan or PDP Sponsor that accepts a generic Scope of Appointment.

Medicareful.com is developed and maintained by Ritter Insurance Marketing. Agents contracted to sell select Medicare products through Ritter Insurance Marketing are eligible to receive their own unique Medicareful.com URL at no cost.

Ritter Insurance Marketing, based in Harrisburg, Pennsylvania, is a national field marketing organization for senior insurance products. With more than 460,000 Medicare policies in force, seven offices, and 160 employees, Ritter Insurance Marketing is a national industry leader in the external marketing and distribution of Medicare Advantage, Medicare Supplement, and Medicare Part D plans.

If you’re interested in your own Medicareful site, visit RitterIM.com/Medicareful2018.


2017 Ritter $100K Cash Giveaway Details & FAQs

We’re at it again! In order to make 2017 your best year ever, we’re once again rewarding our top Medicare Supplement producers by giving away more than $100,000 in cash!

The grand prize will be broken up into four quarterly contests. The top 100 agents in each calendar quarter will earn a share of the total award based on their rank in the top 100. The maximum award is $10,000 and the minimum award is $400 for the entire year depending on how an agent ranks each calendar quarter.

In addition to having Medicare Supplement production through Ritter Insurance Marketing, you must be certified and ready to sell (RTS) for at least one Medicare Advantage or Part D company (although no production for MA/PDP will count towards the contest).

Quarterly Cash Payouts:

1st place: $2,500

2nd place: $2,000

3rd place: $1,750

4th place: $1,500

5th place: $1,250

6th place: $1,000

7th place: $750

8th place: $650

9th place: $600

10th place: $500

11th–15th place: $400

16th–20th place: $350

21st–25th place: $300

26th–50th place: $250

51st–75th place: $150

76th–100th place: $100

Frequently Asked Questions:

Q: For which companies will my Medicare Supplement production count?

A: Your Med Supp production will count for all companies that you’re through with Ritter as the ultimate upline. Just use our Quote Engine to find a competitive product in your market, get contracted with Ritter, and start writing! Different Med Supp companies’ premiums can be counted differently.

Q: I produced Medicare Supplement business through Ritter Insurance Marketing in 2016, but never received a bonus. Why not?

A: To qualify for the bonus, you must meet all criteria, including being ready to sell for at least one Medicare Advantage or Medicare Part D (PDP) plan through Ritter Insurance Marketing. If you are not direct to Ritter, your upline may have requested that their agents not participate in this contest.

Q: I’m a top producer and I have top-level contracts. Can I still qualify?

A: Yes, you can hold top-level contracts and still qualify.

Q: My contract is not direct to Ritter (I have an intermediate upline). Can I still qualify?

A: Yes, as long as your upline agrees to allow you to participate.

Q: I have an agency. Can I “pool” production from multiple agents?

A: No, this contest is for writing agents only.

Q: I have an agency. If my agents earn a bonus, can the bonus be paid to the agency and not to the writing agent?

A: No, only the writing agent will be paid the bonus. You have the option of excluding your agents, but awards will be made to writing agents only.

Q: I have an agency. Can I have multiple agents qualify?

A: Yes.

Q: When will the bonuses be paid?

A: We project bonuses will be paid within 45 days of the end of the contest period (end of the calendar quarter). We will mail winners their bonus checks.

Q: Will I get a 1099 for my award?

A: Yes.

Q: If I don’t write my Med Supp business through Ritter, does it still count?

A: No.

Click here to find the most competitive Med Supp in your area!

Do you have any more questions? We’ll answer them! Call 800-769-1847 and ask about our $100K Cash Giveaway.


Don’t believe the commercials. Retirement in the 21st century isn’t always fishing trips, golf outings, and weekend brunches.

Rather, 70 percent of individuals age 65 and older will require long-term care, according to the U.S. Administration on Aging. And the Robert Woods Johnson Foundation reports just eight percent of all Americans hold long-term care (LTC) insurance policies, which means most of your clients need your help planning.

What Gives?
First and foremost, expensive LTC insurance premiums deter interest. A policy including a daily benefit of $150, four to five years of coverage in home and institutional settings, and three percent inflation protection would cost approximately $2,200 annually for a person under the age of 55. That’s a little over $180 a month when you get in early. But it doesn’t stop at cost.

Age isn’t just a number when it comes to long-term care policies. The older you get, the more expensive plans become. The cost of the exact plan outlined above nearly doubles to $4,066 per year ($386 per month) for a 70 year-old client. Carriers offer plans for ages 18 to 79; the earlier you can get your client covered with an LTC policy, the less expensive it will be. LTC premiums can rise for an entire class of policyholders, so the recent trends are something to consider with your client.

Also, keep in mind that pre-existing conditions are considered with LTC insurance, so purchasing early can protect those who end up facing medical hardships later in life. Those currently using long-term care services or who need help with the activities of daily living (ADL) at the time of purchase will not qualify. Clients with serious medical conditions might also find themselves ineligible. If they have a pre-existing condition, such as AIDS, Alzheimer’s, Parkinson’s, and metastatic cancer, LTC carriers will not issue coverage.

Education is key as well. Many Americans mistakenly believe that their health insurance or Medicare will cover the costs of long-term care. In fact, Medicare only covers medically necessary care, like skilled nursing or rehabilitation, not assistance with daily living. As their trusted advisor, it’s important to make sure your clients understand exactly what they can’t count on Medicare to provide.

How Do You Sell It?
Starting the conversation about an LTC plan can be challenging. Clients in good health now might assume that they’ll be part of the 30 percent who never need long-term care. Others might not even want to think that far ahead. LTC plans are the ultimate “what if?” policy.

But now, the conversation has been made significantly easier with the many new life insurance and annuity hybrid products with LTC riders. These products have been designed to assuage clients’ fear of losing their money by providing a tax-free death benefit, leveraging assets for LTC coverage, and offering return of premium options.

Can your clients afford long-term care? Maybe they can’t afford to be without it. Because of the specifics surrounding enrollment, the answer is going to be different for each of your clients. Evaluating the cost, age, knowledge level, and pre-existing medical conditions will help you to determine that answer.


Want more information on the LTC hybrid options available through Ritter? Please contact LTC Manager Mike Baker at 800-769-1847 ext. 262 or Mike.Baker@ritterim.com.


As an independent insurance agent and a marketer with Ritter Insurance Marketing, I often find myself giving advice to our agents on what products they should have in their sales kit. When it comes to children’s life insurance, there are a large number of consumers and agents who believe that children’s life insurance is a waste of money.

However, experiencing a life-threatening illness or death of a child firsthand makes you understand how the emotional impact is incalculable, and the financial impact is overwhelming. I’d like to share my family’s story for your consideration.

My niece, a typical 16-year-old girl who was happy and healthy, suddenly began experiencing unexplained and very traumatic seizures. She was sent to several hospitals, none of which could diagnose what might be causing the seizures. She was subsequently sent to Children’s Hospital in Pittsburgh, Pennsylvania, for additional evaluation.

After several months of near-weekly emergency trips to the hospital to see numerous specialists, she was finally diagnosed with a rare genetic disorder called OTC (ornithine transcarbamylase) deficiency. The disorder causes excessive amounts of ammonia to build up in the blood. The liver is unable to filter the ammonia, causing extreme seizures. The only cure for OTC deficiency is a liver transplant.

Over the course of one year, my niece was transported via ambulance or life-flight helicopter to Children’s Hospital in Pittsburgh more than 20 times. More than once a month her parents were required to travel at a moment’s notice to Pittsburgh, sometimes needing to stay near the hospital for several days at a time.

At times, our family could only pray that she would make it through the current seizure and that the hospital would be able to stabilize her ammonia levels quickly. On many occasions we were preparing for the worst news as we waited desperately for a liver transplant match.

During this extremely difficult time, my brother approached me to discuss purchasing a final expense policy for his daughter. While we were all hoping for the best, he was forced to consider the worst — how would he pay for his daughter’s funeral? Any savings his family had were long used up paying for medical expenses, travel to the hospital, and lodging expenses. After her long illness and the unforeseen expenses along with it, there was simply nothing left to pay for a funeral.

Insuring a young, healthy child is a much simpler and affordable task than trying to insure a child after they have become sick. Consider if you or your clients were faced with this situation. How reassured would they be knowing they had purchased a policy that would cover the inconceivable?

Your clients must also consider future insurability. Many policies will allow for increased coverage without proving insurability later in life. My niece, for example, at 18 years old, is now uninsurable other than a guaranteed issue policy. However, had she had insurance before her diagnosis, she would be able to keep her policy and possibly increase its face amount in the future, no matter her health condition.

The bottom line is that there is a place for children’s life insurance in your sales kit. You may not always use it, but it is a discussion that will be beneficial to have with your clients who have young children. For me personally? After our experience with my niece, I now own a policy on my own son and encourage my family, friends, and clients to consider it as well.


For more information on the children’s insurance policies available to you through Ritter Insurance Marketing, please contact Brenda Salyer at brenda.salyer@ritterim.com or 800-769-1847 ext. 302.


Your client’s life stages are constantly changing. Shouldn’t their life insurance reflect that? The needs of your single client at age 26 are very different when she’s 42 and married with three kids, a mortgage, and two car payments. But too often we write the policy and let it sit on a shelf collecting dust.

The truth is, as your client’s trusted advisor, you should be checking in regularly to make sure their policy can do what it’s designed to do; provide immediate coverage in the event of the worst. These pivotal life stages are excellent ways to get the conversation started with your clients.

Marriage
Clients tying the knot are bringing their finances together for the first time. A policy will protect your client’s spouse in the event of their death. As the anniversaries stack up and the policy grows, more assets will become available to pay on a mortgage, get rid of debt, take care of outstanding taxes, etc.

Having Kids
A client’s mindset shifts entirely when they have kids. Your clients with young children should have life insurance covering both parents. If the worst happens, benefits can help pay for day care, fund a college education, and even cover everyday living expenses.

Purchasing/Refinancing a Home
When purchasing a home, life insurance policies are often simultaneously acquired to cover the amount of the mortgage loan. In the event of your client’s death, their beneficiaries can use the policy to pay off the remainder of the balance. These policies should be revisited in case of refinancing to ensure they do not run out before the mortgage is paid off. Similarly, if your client moves to a larger home with a higher mortgage, you’ll want to update the policy to cover the full amount of the new loan.

Business Protection
Self-employed clients have substantially invested in their own businesses. Check in regularly to make sure their policies accurately reflect business growth. In the event of your client’s death, you don’t want to risk their family having to liquidate assets to cover business debts.

Divorce
Dealing with divorce can be a mess of emotional and financial decisions, but it’s important to consider how it will affect your client’s life insurance. When a marriage ends, your client may need to change the beneficiaries on his/her policy. If your client has children covered by their former spouse’s policy, they may need to purchase a new policy naming their children as beneficiaries.

Retirement Planning
Permanent life policies add a level of security to your client’s retirement. They can typically borrow against the policy with no capital gains or income taxes involved. Plus, proceeds from life insurance are passed on to your client’s beneficiaries tax-free.

Estate Planning
If your client has enough wealth for their estate to be taxed, a life insurance policy can reduce or completely eliminate estate taxes. Additionally, a policy can provide immediate payment for outstanding final medical bills, burial expenses, and other settlement costs.

Act Early
Don’t forget, the older your clients get, the more expensive it is to buy affordable life insurance. Deteriorating health conditions can cause increased premiums or even prevent your clients from being able to obtain coverage.

Worth noting, the 2015 Insurance Barometer Study by LIMRA and Life Happens found that 80 percent of consumers misjudge the price for term life insurance. For the price of a weekly lunch, your clients will likely be surprised at just how affordable life insurance can be.


There are three common ways to determine a client’s life insurance needs: Multiple-of-income approach, human life value approach, and capital needs analysis. The latter two methods are more sophisticated and allow you to address the specific needs and concerns of your clients’ survivors.

Multiple-of-Income Approach
The simplest method for estimating your clients’ life insurance needs is the multiple-of-income approach. The goal of this approach is to replace the primary breadwinner’s salary for a predetermined number of years.

Begin by multiplying the client’s current annual income by how many years they want to provide financial support for their survivors. The recommendation is to have seven to ten years of life insurance.

It’s an easy method, but it doesn’t take into account the specific needs of survivors, other sources of funds – such as the survivors’ income and investments – or different types of family structures. For example, this method may work well for a family with one child, but might not work as well for a family with six children. It also doesn’t take into account inflation or future salary increases. Using this approach may lead to over-insuring or underinsuring your clients, but it’s a start.

Human Life Value Approach
This method considers your client’s age, gender, occupation, current and future earnings, and employee benefits. There are several steps to determining the overall value of the client if they were to die today:

  1. Estimate the client’s earnings from now until a set point in the future – typically their expected retirement age. Be sure to factor in future wage increases as well.
  2. Subtract the insured’s annual taxes and living expenses from the total. It’s usually safe to assume 30 percent of their salary will go to taxes.
  3. Select an assumed rate of return on the remaining total and subtract it from the gross amount. In other words, subtract the interest you expect the money to earn.
  4. Add the cost of additional benefits provided through employment, such as health care, that will need to be replaced when the client dies. Remember to account for inflation.

The primary goal of this method is to replace income lost. It doesn’t necessarily account for funeral costs, children’s educational expenses, or other specific future needs.

Capital Needs Analysis
The capital needs analysis is the most widely-used approach for estimating life insurance coverage. In addition to replacing the client’s salary, it also accounts for other sources of income and the specific needs of survivors.

This method factors in:

  • Current and future income of both the insured and surviving spouse
  • Immediate lump-sum cash needs upon death, such as funeral expenses, debt repayment, and mortgage payoff
  • Future expenses such as college, weddings, long-term care expenses, and retirement funding
  • Existing family assets, retirement funds, or insurance policies

Once all future needs are taken into consideration, there are then two ways to calculate how much insurance the client needs, based on how they want to utilize the funds in the future.

  • Earnings-Only Approach: The survivors will live off only the investment earnings of the policy without cashing in the principal value. This method is preferable if the client wants funds to be available for their children after their spouse has also died. Like any investment, this method is subject to the risk of changing market interest rates. To provide a sufficient income stream, the death benefit is usually significantly higher than in the liquidation approach.
  • Liquidation Approach: The surviving beneficiary utilizes a portion of the principal as well as the investment earnings. There is more risk with this approach, particularly if the investment earns less than originally predicted. The surviving spouse may not have sufficient income to live on for the remainder of their life.

No matter which method you choose to calculate your clients’ life insurance needs, it’s always a good idea to have a baseline estimate of their survivors’ future financial needs to ensure the policy will provide sufficient support. Getting a life insurance policy is the smartest thing your clients can do to show their family they care!


You’ve heard the news that now’s the time to be selling annuities, you’ve done your initial research, and you’ve discovered the two main types: fixed annuities and indexed annuities. But what sets them apart, and how do you know when to market one versus the other? Keep reading, we’ll fill you in.

Generally speaking, Americans near or of retirement age are in trouble when it comes to having enough money saved to live out their golden years worry-free.

According to AARP’s secondary analysis of their 2014 Retirement Confidence Survey, approximately half of American workers age 50 and older and close to 60 percent of retirees age 50 and older had less than $25,000 in their savings and investments. That’s much less than the nest egg amount the experts recommend people save for retirement, which is anywhere from eight to 12 times one’s annual income.

Both fixed and indexed annuities can provide the average person with a safer way to build their retirement savings while protecting those funds from a downturn in the market. Additionally, both can provide a steady, lifetime monthly income, allowing clients to plan their retirement more clearly. But, how do fixed and indexed annuities differ and when should you sell a client one over the other? We’ll gladly explain.

FIXED ANNUITIES
Let’s start with the basics. By and large, fixed annuities are very straightforward and easy to understand.

A fixed annuity is a contract between your client and the insurance company that guarantees both the principal and the rate of return on your client’s investment. Similar to a bank CD, fixed annuities are very low-risk investments that are not affected by the ups and downs of the stock market.

A fixed annuity can be immediate or deferred. Immediate annuities allow the client, or annuitant, to begin receiving payments the month after they open the annuity. Conversely, deferred annuities postpone the annuitant’s payments until a future date to allow time for growth of the principal.

The most important benefit of fixed annuities is that they typically provide much better interest rates than bank CDs and can provide lifetime payouts after retirement. Interest rates for fixed annuities remain the same for the full length of the contract, and the interest earned is tax-deferred until payments begin.

INDEXED ANNUITIES
Indexed annuities, sometimes referred to as equity-indexed annuities, are much more complex than fixed annuities. Why? This type of product offers features of both fixed annuities and variable annuities and is tied to the stock market.

Because the return for an indexed annuity is based on one or more indexes, its interest rate will vary throughout the contract. As with fixed annuities, an indexed annuity usually offers a guaranteed minimum return, typically between 1 percent and 3 percent, even if the index it’s tied to does poorly. However, a major benefit of indexed annuities is that, if the index is performing well, the annuitant has the potential to earn much higher interest rates.

An indexed annuity has many intricate parts, such as the index it’s tied to, the participation rate or spread used to determine interest calculations, cap rates, and high surrender charges. It’s important that your client thoroughly understands the product they are purchasing, its benefits, and its limitations.

INTEREST CALCULATION
Interest calculation for fixed annuities is basically unnecessary since interest rates are locked-in for the life of the contract. Conversely, interest on an indexed annuity typically follows one of the index crediting methods below. Sometimes, the calculation may involve a combination of these crediting methods.

  • Interest Rate Caps—Some indexed annuities use a cap to determine how much interest will be credited in a given time frame. For example, if the annual cap rate is 5 percent for a particular year and the index that the client’s annuity is linked to gains 8 percent, the client would receive only 5 percent interest that year. If the indexed only gains 4.5 percent, the client would receive the full 4.5 percent interest for that year.
  • Participation Rates—Another common interest crediting method, a participation rate defines how much of the rise in the given index will be credited to the client for each predefined period. For example, if the client’s participation rate is 60 percent and the index rises 14 percent that year, the client would be credited 60 percent of that rise, or 8.4 percent interest.
  • Spreads—A spread or asset fee can be used either in combination with or instead of a participation rate. The spread is usually defined as a percentage and will be subtracted from any gain in the index. For instance, if an index gains 8 percent in a given year and the client’s defined spread or asset fee is 4 percent, this would result in credited rate of 4 percent for the client.

GUARANTEED MINIMUM INCOME BENEFIT RIDERS
An enticing feature now included with many indexed annuities is a rider guaranteeing a minimum annual income based on a specified interest rate. The Guaranteed Minimum Income Benefit Rider (GMIB) only applies if a client annuitizes his contract. How does it work?

An annuity with a GMIB has two separate account values—the actual market value of the annuity, which is based on the performance of a specified index, and the GMIB account value. The GMIB account value is hypothetical and is only used to determine the amount of income the annuitant will receive when he or she elects to begin receiving annual income. GMIBs usually offer a guaranteed percentage of annual interest for a specific number of years, for example, seven percent guaranteed annual interest rate for the first ten years of the policy. It is important the client understands that this guaranteed rate is not credited to the actual market value of the annuity, cannot be withdrawn, and is only the hypothetical GMIB account value.

GMIB riders usually have a rider fee associated with them. However, if your client intends to annuitize the policy and use it as retirement income, a GMIB rider offers a guaranteed minimum income amount that will much likely be higher than the income amount from an actual market value account without the rider in place.

SURRENDER CHARGES
For both fixed and indexed annuities, the annuitant will incur surrender charges if he cancels his contract, or withdrawals an amount of money in excess of a penalty-free withdrawal allowance for a given year, during the annuity-specific surrender period.

The surrender periods for both fixed and indexed annuities are usually equal to the length of the contract. Fixed annuities often have surrender periods that are for three, five, seven or ten years. Indexed annuities have surrender periods that also vary in contract terms, with the most common being ten years and the longest being twelve or fifteen years.

If an annuitant chooses to cancel his contract prior to the end of the surrender period, hefty surrender charges will apply. The surrender charges for both types of annuities can be as much as 10 percent. These charges will vary between carriers, but usually decline over time, typically 1 percent per year.

DETERMINING THE BEST FIT
Overall, fixed annuities are an excellent option for seniors who don’t want to take on the risks of the unpredictable stock market but want to achieve higher interest rates than their bank CD can provide. And due to their more complicated nature, indexed annuities are more suited for savvy investors, and typically your younger clients looking for more of a return on their investment without taking on much risk. But keep in mind, while an indexed annuity can be a great vehicle for a client looking to maximize his return, it’s not a good fit for everyone.

You, as the agent, must assess your client’s interests, knowledge, and financial situation. If your client has little interest in the stock market or how it works, and has never had investments tied to it, an indexed annuity is most likely not the right product for that client. However, if your client appears to be stock market-savvy, understands the product, and has clear expectations about potential future earnings and possible charges, definitely discuss an indexed annuity as a possible building option for your client’s retirement savings.

As a general rule, the more informed your client is, the happier they will be with their investment. The Financial Industry Regulatory Authority (FINRA), has developed an Investor Alert explaining indexed annuities via an easy-to-understand, generally unbiased approach. Providing this alert to your clients will allow both you and your client to discuss and determine if an indexed annuity is right for them.


For more information on the various annuity products available to you through Ritter Insurance Marketing, please contact Jed Karpinski at jed.karpinski@ritterim.com or 800-769-1847 ext. 226.


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Starting September 1, 2016

Monthly Bank Drafts will be Processed EVERYDAY
The 1st through the 28th of Every Month

Your Client Can Now Choose From a Variety of
Days to Have Their Premium Drafted.

Dates NOT Available 29th- 30th - 31st

Download the PDF Here


PENDING BANK DRAFTS ONLY

If you have a PENDING case and you would like
to change the bank draft date:

Please Call Traci on the
Agent Hotline 855-332-8809
Option 1 - New Business


Studies say 70 percent of seniors can expect to use some form of long-term care during their lives. There are various ways to obtain long-term care (LTC) coverage, but which should you advise for your client?

Every option has pros and cons, but we believe the best choice depends on your client’s individual situation.

The popular methods of securing LTC insurance are traditional stand-alone LTC policies, life insurance with an LTC rider, or an annuity with a LTC rider. Do you give your clients all three options?

Traditional Stand-Alone LTC Insurance
Long the only method of obtaining LTC coverage, stand-alone policies have a handful of points that clients and advisors alike should consider.
First, they lack the cash value buildup of other options, and their premiums can be very expensive. Since those premiums are tied to the insurer’s claims expenses, they are subject to rise. This makes these policies increasingly difficult to maintain for those living on a fixed income.

Clients also fear the “use it or lose it” nature of stand-alone LTC insurance. A policyholder can pay premiums for years and years into the plan, with the risk that they’ll pass away and never use the benefits. It’s very limiting to a client to only have one way to realize the investment.

Finally, with less than 10 carriers left offering traditional LTC plans, the market is very volatile. But there are alternatives to tradition, and we’ll provide reasons we think they’re worth considering.

Life Insurance with an LTC Rider
You can fill two needs with one deed when you provide a client’s life insurance policy and attach an LTC rider.

When the rider is triggered, these policies allow clients to pull money tax-free from their life insurance death benefit to pay for long-term care if needed.

Plus, in contrast to traditional LTC insurance, the policy value builds, leaving more money for long-term care. And if long-term care isn’t needed, the policyholder has been saved the cost of LTC premiums.

The main drawback of these policies are the rider fees, which don’t feed—and sometimes reduce—the death benefit. However, these fees are typically significantly less than traditional LTC premiums.

The client’s initial life insurance purchase can provide sometimes double or triple the death benefit in long-term care benefits. When long-term care benefits are needed, some policies pay out a percentage of the funds (usually a fixed amount on a monthly basis), while others reimburse long-term care expenses as they are incurred. Either way, these funds are an acceleration of the initial death benefit.

Fixed Annuity with an LTC Rider
The final way to secure LTC insurance is to attach an LTC rider to a fixed annuity. These riders can typically multiply a client’s initial investment by two or even three times.

Clients can retain access to their money if they should need it, and the policy will continue to grow if nothing is withdrawn for long-term care.
Two attractive features of this option are the affordable rider fees, which are typically less than traditional LTC premiums, and the underwriting, which is less stringent than it is for traditional LTC insurance or life insurance policies.

However, these policies are typically paid via a single premium, so many require a larger amount of money up front.

Make It Work for Your Client
What do we suggest? We can never give you better advice than to do what’s right for each of your individual clients. Determine the likelihood they’ll need long-term care and their financial situation. With this information, you can decide if your client can afford the monthly premiums or if they would be better off making a lump sum payment in an annuity or life policy.

Additionally, consider the cash buildup of the policies available and the liquidity of your client’s assets. When you’ve thought through all of these things, you’ll be able to guide any client in their long-term care planning.


Want more information on the LTC hybrid options available through Ritter? Please contact Life & Annuities Manager Jed Karpinski at 800-769-1847 ext. 226 (jed.karpinski@ritterim.com) or Senior Marketer Brenda Salyer at 800-769-1847 ext. 302 (brenda.salyer@ritterim.com).


Traditional long-term care insurance is no longer the only way to pay for future long-term care expenses.

The longstanding deterrent to traditional long-term care purchases is the “use it or lose it” concern that most insureds have regarding this type of insurance. While we as agents know the likelihood of our clients needing long-term care is high and can recite the statistics to them, we cannot predict the future. Fortunately, we now have numerous alternative solutions to assuage this concern for our clients.

Most people are confused about how to begin a long-term care plan. Because planning can be overwhelming, many put it off so they don’t have to think about it or make those difficult decisions now. But as our clients age, one clear priority becomes wealth preservation: the desire to provide financially for their spouses, children, and future generations. Nearly all of our clients want to leave a legacy for their surviving families and are willing to discuss how to plan to do so.

With the myriad of linked-benefit products that are now available to our clients, including life insurance/long-term care linked-benefit products, we now have an opportunity to begin a discussion about long-term care planning through a life insurance purchase. Many are unaware that these products present alternative ways of preserving wealth and funding long-term care expenses.

The Benefits of a Hybrid Product

The obvious benefit of a life insurance/long-term care hybrid product is that it allows your clients to put life insurance in place to provide for their loved ones in the event of their death. If your client has a long-term care benefit rider and does not use its benefits, the full death benefit passes tax free to their named beneficiaries.

LIMRA’s 2014 Insurance Barometer Study indicates that over one-half of Americans are concerned that they will be unable to fund long-term care expenses, and one-third of Americans have considered the financial difficulties that would be placed on their surviving families if they passed away prematurely. Given those concerns and the fact that 30 percent of Americans have no life insurance in place at all, it is very likely that many of your clients have a need for life insurance or additional life insurance. For your clients who are uninsured or underinsured, it is also unlikely that they have funds set aside for long-term care expenses or have purchased a stand-alone long-term care policy.

If your clients do indeed have adequate life insurance in place, they may benefit from exchanging it for a hybrid life insurance product. The Pension Protection Act of 2006 allows owners of traditional life insurance policies to exchange their policies through a 1035 exchange for a hybrid policy without having to pay taxes on the interest earned within the initial policy. Payouts for qualified long-term care expenses are tax free, which could potentially translate into a significant taxable gain inside the new policy.

Your client’s initial life insurance purchase could provide double, triple, or more in long-term care benefits. When long-term care benefits are needed, some policies pay out a percentage of the funds (usually a fixed amount on a monthly basis), while others reimburse long-term care expenses as they are incurred. Either way, these funds are an acceleration of the initial death benefit. When the initial death benefit is fully exhausted, some policies have extended benefit riders that can provide double or triple the initial death benefit amount.

Is a Hybrid Policy Right for Your Client?

There are many considerations to take into account when determining if a life insurance/long-term care hybrid policy is right for your client. How will your client pay for the policy? Will it provide adequate funds for his or her future long-term care needs? What type of inflation protection is available with the policy and what is the associated cost? What remains of the death benefit if the long-term care benefits are exhausted? Is your client currently insurable? What are the specific benefits and limitations under the long-term care rider?

Policies can be funded through one single lump-sum payment, which is most common, or paid over any number of years. To illustrate these payment options, imagine you have a 65-year-old male client who has $50,000 of readily available assets in the form of bank CDs or other accounts. That $50,000 lump-sum payment would purchase a single-premium life insurance policy of $64,864. Your client chose to purchase a long-term care acceleration of benefits rider for two years and an additional extension of benefits rider for four additional years. With the two riders added to the policy (and assuming long-term care benefits are needed), your client would receive $32,432 annually for a maximum of six years, or $2,703 monthly. If your client utilized all six years of his potential benefits, his initial $50K investment would provide him with a total of $194,592 in long-term care benefits.

The cost of the riders is also a factor. In the example above, there is a monthly fee associated with each of the two riders for the first 10 years of the policy. The initial acceleration of benefits rider fee is $19.78 per month. The extension of benefits rider would cost your client an additional $35.87 per month. For a total of $55.65 per month, your client would be securing nearly four times more than his initial investment in potential long-term care benefits. If your client doesn’t require long-term care, the death benefit of $64,864 would pass to his beneficiary upon his death.

Another consideration is the cost of long-term care. Will the long-term care benefits provided by the policy cover the cost of the services your client needs? According to the U.S. Department of Health and Human Services, the current average annual cost of long-term care in California ranges from $20,020 for adult day-care services to $83,950 for a semiprivate room in a nursing home. In our example above, the $32,432 annual benefit may not be sufficient to fund care for this client. Compared to a traditional long-term care policy, an acceleration of benefits rider probably wouldn’t cover all necessary care considering the rising costs of home health care and nursing home care. On the other hand, the benefits provided may limit the amount of self-funded and family-provided care your client would require. With the alternative being no long-term care coverage at all, even some assistance provided by such a rider would be beneficial to your client.

Many traditional long-term care policies offer built-in inflation protection. However, with some hybrid policies, it is not an option or it is offered as another rider that your client would have to elect and pay additional fees for. Inflation protection riders offer increasing long-term care benefits that are typically between 3 and 5 percent annually. If the cost of electing an inflation protection rider is not prohibitive for your client, adding it could considerably increase his or her benefits. Referring again to our previous example, if this client needed benefits at age 79 and had elected a 3 percent inflation rider, the monthly payout on his policy would be $3,331 and would continue to increase annually by 3 percent.

Additionally, it is important to make certain that your client understands the benefits and limitations of his or her policy. If a woman leaves her job to care for her husband in their home, is income replacement a qualified expense under a long-term care rider? In most cases, it is not. Covered expenses under a long-term care rider vary by carrier. There may be a deductible or elimination period. Preexisting conditions may not be covered for a specific timeframe. Benefits are usually triggered by a certification from a licensed health-care practitioner stating that the policyholder is unable to perform at least two of the six activities of daily living (ADLs) or is experiencing severe cognitive impairment or loss of mental capacity. A prescribed plan of care from the physician is usually required. Be sure your clients have a clear understanding of how and when they are able to access the benefits under their policy.

Final Thought

Before recommending a life insurance/long-term care hybrid policy to your clients, consider their need for adequate life insurance and desire to provide for their loved ones. A linked-benefit life insurance/long-term care policy with no additional life insurance may not be a viable option for clients who wish to leave behind a legacy. They could ultimately exhaust the death benefit to pay for long-term care expenses, leaving little to no benefits for the surviving family. Be prepared to discuss alternatives. If your client has no or insufficient life insurance and no long-term care in place, a linked-benefit policy could be an excellent option.


This article was previously published in California Broker Magazine.