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.
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 firstname.lastname@example.org 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.
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.
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.
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.
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.
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.
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.
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.
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:
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:
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.
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.
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, 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 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.
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.
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 email@example.com or 800-769-1847 ext. 226.
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
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 (firstname.lastname@example.org) or Senior Marketer Brenda Salyer at 800-769-1847 ext. 302 (email@example.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.
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.
Stays in nursing homes and assisted livings facilities are increasing as the baby boomer generation reaches its golden years. Unfortunately, most senior living facilities are expensive and those costs continue to rise.
Since qualifying for facility benefits can be difficult under Medicare, without assistance, there’s no soft landing when those bills arrive.
So what can you do for your clients? You offer a short-term care plan. Depending on the carrier, these plans offer benefits for up to a year in nursing homes, assisted living facilities, home health care, adult daycare, or hospice care.
Here’s how you can help your clients secure the right plan when the cost for services are high and the insurance coverage is low.
Understanding Rising Costs
The median bill for a private room in a nursing home is now $91,250 a year—a number that’s risen 4 percent every year for the last five years. That means that one year in a nursing home can now cost nearly as much as three years of tuition at a private college. Yikes. That’s not chump change. Which begs the question: Are your clients prepared?
It’s important to help them, and, in some cases, their adult children, understand the reality of health facility costs—not to scare them, but to prepare them for what they’re undertaking. Showing them the importance of preparation can help you showcase the benefits of the short-term care plan.
Facing Scarcity of Coverage
It’s also important to help your clients understand the coverage they qualify for. To qualify for nursing home benefits with Medicare, the beneficiary:
In contrast, short-term plans:
The other option for seniors are long-term care plans, but they can be expensive with difficult underwriting. Short-term care plans are a great middle ground for seniors who don’t qualify or can’t afford their Medicare or long-term care options. When you consider the costs Medicare beneficiaries could be left with, short-term care plans bring tremendous value.
Keeping Your Clients Informed
The more your clients understand about their options for senior living, such as nursing homes, hospice care, and assisted living facilities, the easier it is to get them into a plan that meets their needs.
Set an appointment or send out a letter to present your clients these key factors in their care, costs, and benefits. Since even a short stay could deplete a senior’s life savings, it is paramount that they are given every opportunity to secure the protection and peace of mind they deserve when it comes to their health coverage.
Contact your regional marketer at 800-769-1847 to find out what plans are available in your state.
Ritter does not have short-term care plans available in CA, CT, FL, HI, MA, NJ, NY, ND, SD, VT, or WA.
Let’s face it. Your clients don’t want to feel like they’re being sold to. However, when you trade in the checkered suit and take the role of a trusted advisor, sales and cross-sales are more likely to occur naturally. It’s a combination of asking the right questions and remaining focused on your clients’ needs. Not only does the advisor approach increase your value as an agent, it also opens doors for new cross-selling opportunities!
Why take on the advisory role?
Few seniors meet with insurance agents because they want to buy something. What they really want is sound advice they can trust. They want to feel comfortable calling you with questions and they look to you as the expert. Walk into that meeting with the mindset of an advisor, and your clients won’t feel like they’re being pressured to buy a thing.
Once your client looks to you as a trusted advisor, you’ll find plenty of opportunities for additional sales. Never force the sale, though. Often, it’s as simple as mentioning a product and coming back to it at a future appointment. Your focus should always be on building a good relationship with your client while fact-finding to discover their needs.
How can you implement this strategy?
Meet in person | It’s always preferable to talk face-to-face, especially while you’re still building a relationship. Further, meeting in person when a sale is not imminent goes a long way. Don’t forget to stay in contact, too. Periodic newsletters are a great way to continually build your client relationships.
Do your homework | Prepare a list of questions prior to meeting your client and know what answers will open doors to what sales. Asking about their family history of cancer or heart disease could lead to the sale of a critical illness plan. Similarly, asking about concerns related to funeral costs could bring about a final expense plan sale.
Listen attentively | To make a truly informed recommendation to your client, you need to know as many facts about them as possible. When your client is comfortable with you, they’ll be far more open about their feelings on key decisions and common concerns. As your relationship grows with clients, you’ll find that cross-selling opportunities will present themselves. Ask yourself what their main concerns are. Costs left to family members if they pass? Depleting savings should they be confined to a nursing home? Picking up on subtle cues will help you identify which products your client is most likely to be interested in.
Focus on satisfying needs | Rather than laser-focusing on the product you want to sell, steer the conversation around the relevant needs that product would satisfy for your client. For example, “So, you want to make sure your family isn’t left with unexpected costs when you pass away. If they received $10,000, do you think that would cover any funeral costs?” It might seem like an insignificant distinction, but wording it this way keeps the consultative tone of an advisor.
Don’t have the solution? Refer!
You might not have all the answers and that’s OK. Remember that if you’re not qualified to give the advice your client is seeking, don’t offer it. Instead, reach out to local business partners. It’s always wise to have a local financial advisor to whom you can refer clients to. Just do your research and make sure the company treats their clients properly. Be diligent with your referrals because the quality of their services will come back on you. And if you send enough business their way, chances are, they’ll be more than happy to return the favor.
Go forth and advise!
Now that you have all the tools you need to act as an advisor, put these recommendations to the test. Focus on building a great relationship with your clients while fact-finding to discover their needs. Cross-selling success is simply the natural result.
Want to make sure you have the right products to solve your clients’ various needs? For information on ancillary plans available in your market you can contact Ritter’s Ancillary Specialist, Jake Fyrster, at firstname.lastname@example.org or 800-769-1847 ext. 287.