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Solving Two Cornerstones of Retirement Planning

cornerstone-contentWe’ve all heard that retirees are living longer. We’ve also heard that a retiree’s biggest fear is running out of money. Even if we weren’t living longer as a populace, the need for income in retirement would remain. To state the obvious, if you’re retired, no one is paying you anymore. Except maybe Uncle Sam and can you really live on Social Security alone?

When you breakdown retirement planning, there are really two cornerstones of retirement planning that must be satisfied – and if you do that, the plan should be considered a success.

So what are those two cornerstones? Guaranteed Income and Long-Term Care (LTC).

Cornerstone #1 – Provide a guaranteed stream of income. How do we do th
at? There are a variety of fixed annuity options that all could help solve this threat. Immediate annuities, deferred income annuities, multi-year guarantee annuities, traditional annuities, fixed index annuities, income riders for fixed index annuities. If you’re talking guarantees, any of these could work and we would love to show you how well these compete with any other income generating vehicle available.

Cornerstone #2 – Long-Term Care; something not everyone wants to talk about. 70% of people over age 65 will require long-term care.1 Chances are you have someone in your life that has required or will require long-term care. It’s just a reality. As we get older, we need more help. The alternative is dying and that’s not much of a retirement plan. Care comes in so many forms – it could be as simple as somebody doing grocery shopping for you to being as involved as daily care both at home or in a nursing home. As we get older we need help – we just do. How will this “help” be paid for? Out of pocket? We’ll be destitute in no time. Sell the house? The memories, the comfort, and the freedom gone forever. Insuring for Long-Term Care or chronic care is really the best option and there are so many ways to do it now that there really is something for everyone. Here’s a list of some of the tools we use for solving this need: traditional long-term care, linked life/LTC, linked annuity/LTC, life insurance with LTC riders, life insurance with chronic care riders, and fixed index annuities with chronic care benefits.

Retirement planning is made simple with insurance products. We always talk about guarantees. Retirement planning needs to focus on guarantees, pre-retirees don’t have the time for risk. Once you take care of these cornerstones, your clients can sleep more soundly.

1 DHHS, 2008. Statistics taken from www.
longtermcare.gov.

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Designed to Fail? An Update on the DOL Regulation

usdepartmentoflaborOn September 23rd, InvestmentNews published an article titled “DOL fiduciary rule to cost the securities industry $11B by 2020: study” with most of the cost borne by independent broker-dealers.

While recently speaking with a large independent broker-dealer, they shared with us that they have allocated 7,000 hours of information technology (IT) work for 2017 to implement the new DOL guidelines. At a very conservative $100/hr, that’s $700,000.

Who’s going to pay for that? We’re also hearing that because of the new DOL regulations, E&O insurance will increase 8-10% next year, plus there will be additional fees for IT implementation with one broker-dealer thinking of an additional $250 IT compliance charge per representative.

Even forgetting the additional paperwork to process fixed indexed annuities after DOL implementation, “reasonable” compensation hasn’t been addressed but it certainly means that it will not be increasing. So, registered representatives and broker-dealers will not be happy.

What about non-registered producers not affiliated with a broker-dealer or registered investment advisor? They may be able to still sell fixed indexed annuities if they fall under the jurisdiction of a Financial Institution (FI). Some organizations have filed for FI status but there are no set guidelines in determining what qualifies as a FI and no time frame for approval. Plus, we haven’t seen E&O coverage availability for FI status. And, since the FI is taking on significant risk for a non-registered producer selling these products, compensation will be split in some way. So, non registered producers will not be happy.

What about the carriers? If they do nothing, they may lose significant qualified business. Can they afford to do nothing? We don’t think so. They will at the very least have to retool products and procedures at significant cost perhaps just to maintain existing sales levels. So, carriers will not be happy.

What about consumers? The initial fear before the new DOL regulation is implemented would be that middle class America would not get the advice they desperately need as it may be unprofitable for advisers to give that advice in the future. State Farm just announced that all their registered representatives will need to give up their securities licenses and that customers, if they need investment advice will be able to call an 800#, receive information (not advice), so the customer can then make their own investment decision. What will other distributors do in the future? Will they follow the State Farm lead and cut out investment advice to their customers? Customers will not be happy.

Maybe the federal government is smarter than we think. Maybe this new DOL regulation was designed to fail. The federal government has been seeking to wrest control of fixed indexed annuities away from state insurance regulators and wanting them under federal control. This battle has gone on for years and just a few days ago, an Illinois appellate court panel ruled that fixed indexed annuities are insurance and not securities products under state law. And you thought this issue was resolved years ago?

Maybe, just maybe, if a regulation goes into effect that seemingly upsets just about all constituencies, there will be such clamor for change that true change may come – complete Federal regulation of fixed indexed annuities as well as all qualified funds, or simply one’s retirement money.

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Uncover Planning Gaps with Beneficiary Reviews

When most people hear the words beneficiary review, the obvious thoughts run through their minds:

  • Did I remember to add my youngest child as beneficiary to my insurance policy?
  • I just got divorced and need to remove my spouse as beneficiary.
  • I need to add my new grandchild as a contingent beneficiary.

Of course there are countless other scenarios but you get the idea.

What I think when I hear beneficiary review is Opportunity!

Yes, all the obvious thoughts are extremely important. For the consumer, a beneficiary review is their chance to match current beneficiary designations with their desired disposition of assets:

  • Are all assets going to the desired person(s)? In the desired manner?
  • Have “worst case” contingencies been considered and covered? Is the client sure?

After a thorough review of Zenith Marketing Group’s Beneficiary Review Producer Guide (download), you should be capable of helping clients answer these questions.

When conducting your reviews, be on the lookout for these hot button areas of significant concern where a misdirected designation may cause great distress or unintended consequences for you. Here are some of these concerns:

  1. Life insurance/other assets payable to the “estate of the insured.” Depending upon the client’s factual situation, this may not be an efficient designation. Proceeds would be included in the probate estate of the insured; thus, they would be subject to probate expenses before being distributed to the estate beneficiaries.
  2. Insured has divorced since insurance was purchased. Proceeds may still be payable to a former spouse.
  3. Re-marriage. The same issues as divorce emerge and re-marriage may create others. For example, who are the contingent beneficiaries on a life policy? The insured’s children, children of the current marriage, or someone else? Be sure that the intended parties are designated.
  4. Planning if the beneficiary predeceases the insured. This is why a contingent beneficiary is strongly recommended in all situations. If no contingent beneficiary has been named it is likely that proceeds would become payable to the insured’s estate.
  5. Testamentary trust is named. A testamentary trust is created by the will upon the death of the insured. Thus, it does not exist until the will has been probated, which may be some length of time. This may cause delay in distributing life insurance proceeds. If the will and trust are outdated and pass assets to unintended parties, this aggravates an already inefficient designation. The clients should seek legal advice with regard to any questions they may have regarding how a trust may be established or how a trust may be applicable to their factual situation.

But for you, the producer, the process of collecting data about client assets and their disposition will help you identify insurance shortcomings, and, in many cases, point to the need for a more detailed and separate insurance review and the potential for a new insurance sale. Opportunity. Use the Zenith Beneficiary Review Financial Journal (download) with your clients to collect the data.
This thorough collection of data may reveal assets you had no idea even existed, leading to discussions such as:

  1. Do current insurance products continue to meet the client’s needs?
  2. Do current products possess the necessary features (for example, a guaranteed death benefit) desired by the client?
  3. Is the product type appropriate to meet client needs? (term, UL, etc.)
  4. Is the insurance amount adequate? (An insurance needs analysis will help determine amounts needed.)
  5. Are there health insurance gaps or needs which may require remedy?
  6. Is there a need which may be filled by annuities, either deferred or immediate?
  7. And, are there other individuals within the client’s sphere of influence who could benefit from a beneficiary review, who may also have insurance needs?

Answering these questions should lead you to new insurance sales opportunities and the chance to enhance client trust by demonstrating your ability to offer competent and comprehensive life insurance services.

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A Europe of Many Cultures or a European Culture?

Last Thursday saw a historic vote abroad: the United Kingdom (UK) voted to leave the 28 country European Union (EU). In effect, the British just had their “Tea Party” event. A few days before the vote, I wrote about the possibility of this happening.brexit1

Although there was certainly passion on both sides – the ‘stay’ or ‘leave’ camps, let’s separate facts from impressions and think about what this means for the protection industry (life insurance and annuities), our industry.

While many would say the vote was somewhat close – 52% to 48%, the ‘stay’ campaign was really marketed as a ‘stay and reform’ campaign meaning that even if you voted to stay in the EU, the expectation from the typical UK voter was that there would be reforms made within the EU to satisfy these voters. The vote was never about keeping the status quo. That’s an important distinction that many pundits don’t articulate.

So what really happened? In 1957, the Treaty of Rome created the European Economic Community (EEC), a regional organization aimed at integrating some European countries economically which included a common market and customs union. Ultimately, this led to the EU which allowed for the free movement of goods, capital, services, and people, under the direction of unelected foreign (EU) officials from Brussels. While immigration was one aspect for the push for Brexit (and the one heavily played up now in the press), the vote was, above all, a solid ‘No’ to one-size-fits-all regulations. Imagine each of our states relinquishing all of its decision-making to the Federal government.

Is the EU trying to create a European culture or maintain a Europe of different cultures? That has been a key distinction on what side the voting camps fell into. Consider some insane EU rules: fruit should be “free from abnormal curvature” (no crooked bananas or cucumbers), vacuums above 1,600 watts were banned, water can’t be marketed as ‘hydrating’ after Brussels scientists said it wasn’t so, restaurants using olive oil on their table would be forced to use individual tamper proof bottles instead of refilling the same one each time, menthol cigarettes would be banned, etc.

And over the past number of years, many poorer EU countries (Greece, Cyprus, Ireland, etc.) have maxed out their national credit cards and benefited from the wealthier EU countries providing financial relief causing pressure on both sides.

My expectation is that other countries may follow the UK lead and vote whether to stay in the EU or not. We could see the unraveling of the EU and the Euro.

The markets fell dramatically last Friday worldwide. Is this because the leave vote is bad for the markets? Not necessarily. It’s really because the markets didn’t expect this vote. The wealth managers thought it couldn’t happen and the markets hate uncertainty.

But concerning the United States, consider this:

If the EU is weakened or even fell apart, there would be a smaller piece of the world competing with the US for investors’ attention and assets. Back in 1992, there was a fear that the EU would become a true powerhouse that would steal investments from the US. To a certain degree, that happened for a few years and while the EU (and the Euro) remained strong, it was a threat to our economic dominance. Remember all the talk about the Euro becoming the currency of choice worldwide? Now that the EU is weakened, it should help the US. More money will flow to safety (US). More economic activity will accrue to US firms. True, in the short term some US firms that export to the EU may be hurt, but long-term it may be very good for the US.

As far as interest rates are concerned, be prepared for continued low rates as investment continues to flow here. Your clients should not expect interest rates to rise anytime soon. There has been a huge opportunity cost for clients who kept waiting for interest rates to rise. They need to realize that interest rates will remain low. Life insurance and annuity guarantees, in a volatile market, will remain so important that there is a huge opportunity to make sure your clients understand that what we provide can truly guarantee security.

 

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Risk Aversion Grows as “Brexit” is a Distinct Possibility

While most of our industry focuses on the new Department of Labor (DOL) rules and how this would affect annuity sales in general over the next few years, there’s an event happening next week that could upset the financial markets.

You’ve started to see it already. This week, highly-rated government bond yields dropped dramatically. The US 10-year Treasury fell to 1.56% and the 10-year German Bund fell as low as minus .034% before closing at 0%.

brexit1What’s going on? On June 23rd, the United Kingdom will vote on whether to stay or leave the European Union (EU). Leaving the 28 nation block (Brexit, as it is known) wasn’t considered a real possibility just a few months ago. However, now the polls are tightening up, paving the way for the distinct possibility of a UK exit.

Even the CEO of AXA, Henri de Castries admitted an “extremely high” probability of a vote to leave. If this happens, the EU could start to unravel.
The markets don’t like uncertainty and in times like this there is a flight to safety.

We’ve seen fixed annuity rates drop recently and we expect more rate reductions in the coming days. Is it possible that we could see the US 10-year Treasury fall to 1% in the coming weeks?

The markets, and investors, have anticipated rate increases for years. Many have stayed on the sidelines delaying purchases of insurance contracts such as fixed annuities. The “cost of waiting”, in the hope that fixed rates would increase, has been enormous for many clients.

Realistically, how important are rates when clients are really concerned about safety and guarantees? Yes, interest rates remain low, and they may go lower – but fixed annuities may still be considered a true safe haven for your clients’ safe money.

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Can the DOL Lawsuit Stop a Runaway Train?

2860 Royal Hudson Steam Locomotive on Route Through British Columbia Forest at Night. Semi-Streamlined 4-6-4 Hudson Steam Locomotive - British Columbia Canada. Digitally Generated illustration. Made From Real Royal Hudson Locomotive Photography.

There continues to be a flurry of articles, emails, and webinars to discuss how the recent DOL ruling affecting Fixed Index Annuities (FIAs) sold using qualified money will impact all of our lives, livelihoods and practices. And I just can’t help but think it’s all becoming a noisy, inbox-filling waste of time. I get three emails a day projecting out the doom and gloom of the DOL rule. Everyone suggesting they can help me understand the rule. Well the rule isn’t even a rule yet!

And late last week, there was finally some new news on the matter – the filing of a lawsuit to overturn the DOL Fiduciary Rule. You may recall in a Message from the CEO in April, I closed by projecting this exact turn of events. If you haven’t heard yet, nine industry groups, led by the U.S. Chamber of Commerce filed a lawsuit in an attempt to stop the Department of Labor’s new fiduciary rule. With the Obama administration’s fast-tracking of the rule, the question becomes, can a lawsuit stop a runaway train?

For more specifics on the lawsuit I recommend this article.

Though the future of the DOL rule may be in doubt, many insurance carriers who play in the qualified plan space are already reacting by pulling product from the shelves and working on alternative product solutions. Even if the rule ultimately fails, it’s fair to assume that carriers and broker/dealers will be changing the qualified plan landscape for FIAs. At the very least, if you are registered with a broker/dealer we expect more of you to experience mandates to put these sales through their grids.

As for the future of the rule, with a major lawsuit now in play, at a minimum we are very likely looking at delayed implementation, if not complete dissolution. And if the implementation is delayed for just 6 months, a new administration with a new secretary of labor may find a way to kill or delay it further. It may not even matter who wins the election.

So maybe, just maybe, a lawsuit can stop this runaway train.

Zenith Marketing Group is tracking the DOL Rule very closely. Regardless of the outcome of the lawsuit, we are looking at options to help accommodate those of you in the FIA/qualified plan arena who will be most affected.

Stay tuned for more on this from us.

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A Disability Guide for the Life Insurance Salesperson

Your clients need disability protection. They also need your help finding the right solutions to protect their incomes and businesses.

Nearly everyone in the working population needs income protection so the market opportunity is wide open. As you get started building Disability Insurance (DI) into your business, consider:

  • Your existing expertise and natural markets
  • Industries where your friends and family work
  • Neighborhood small businesses, local college programs and area associations

pexels-photo-40120Make a list of prospects and potential clients and then work that list. The first step is simply to BRING UP the need for income protection in every client meeting.

How and when you introduce DI into the conversation depends entirely on your meeting style. There shouldn’t be a need to change anything other than adding one line to your presentation: “I firmly believe that no protection plan is complete without the inclusion of disability coverage.” If you’re not comfortable discussing the details of DI, reference the DI specialists at Zenith Marketing Group.

People protect their homes, cars, lives, and even identities with insurance. Should something as important as income be left off that list?

Before your clients will be able to answer that question, you need to make sure you are framing the conversation around the following, more specific questions:

If I became too sick or hurt to work…

  • How long could my family survive without my income?
  • Does my family have the means to cover current debts and daily living expenses, and continue to save?
  • Do I have enough income protection in place (including individual and group insurance)?

Most people don’t realize it, but the threat of becoming too sick or hurt to work is real. Yet, many don’t have income protection — or are unknowingly under insured.

Check out these resources from Principal to help you approach your clients:
Flier – “Take Action – Incorporate IDI Into Your Practice”
Video – “Income Protection – Why it’s Important”
Flier – “What are your priorities?”
Calculator – Disability Insurance Needs

Most clients simply need help understanding the need, and remember, we can assist you every step of the way – before, during and after the sale. (800) 733-0054

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The Basics of Cash Value Life Insurance

All too often we discuss life insurance and concepts with the expectation that everyone we deal with has an advanced understanding of how these contracts work and how best to apply them to their various clients’ situations. That’s just not the case. The truth is that we work with a wide variety of insurance producers, ranging from the very experienced lifers to the less experienced new-to-the-biz advisors. So every once in a while, it’s a good idea to dial back the advanced sales rhetoric and revisit the basics. And really, even the most experienced can benefit from a refresher. For this post, we’re taking a closer look at the basics of Cash Value Life Insurance.

What is Cash Value Life Insurance?Three golden eggs in hay nest

Cash value life insurance provides coverage on an insured person’s life through a death benefit that generally passes to beneficiaries free of federal income tax. The tax-free death benefit can be especially important for those concerned about estate taxes. But cash-value life insurance can also provide significant tax benefits while you’re still alive.

Why Should Anyone Purchase Cash Value Life Insurance?

There are a great number of reasons that someone might be interested in this type of insurance policy. We won’t cover them all, but the aforementioned tax benefits are a great place to start.

Here is a brief overview of some of the tax advantages associated with cash value life insurance:

  • Tax-deferred earnings: You do not have to pay taxes on any gains in the policy during the year in which they are earned or while they remain in the policy. Taxes are deferred until the policy is surrendered, lapses or when certain distributions occur. Gains left in the policy can continue to accumulate and lead to potentially higher policy values.
  • Tax-free withdrawals: Premiums paid into a policy can be taken tax-free up to your cost basis in the policy.
  • Tax-free loans: If there is still sufficient cash value in the policy, you can continue taking money out in excess of your cost basis, through tax-free loans. The loan interest rate is generally lower than the loan rate charged by banks for similar secured loans.
  • Federal income tax-free death benefit: In most cases, the death benefit passes to your beneficiaries free of federal income taxes, providing an excellent way to transfer wealth to a spouse or the next generation.

The tax advantages create a lot of flexibility in these policies. Consumers put a lot of value in flexibility. The cash value that is built up in a policy can be used to help pay premiums, pay for college, provide a down-payment on a new home, a new boat, a new car, supplement retirement income, and more. Or take this into account: life insurance products and pricing are changing constantly. What can you do if during an annual policy review you find your client’s current policy no longer fits their needs or is under-performing? Cash value buildup can help your clients exit an existing policy and make the purchase of a more appropriate policy a more affordable venture.

Who Is the Ideal Client for Cash Value Life Insurance?

Cash Value Life Insurance and permanent insurance in general is not for everyone. For some clients, the cost of the premiums outweighs the value – perhaps for those clients, take a look at a small cash value policy blended with a larger term policy. After all, it’s hard to argue with the opportunities provided by a cash value policy. The ideal client is hard to pinpoint in reality. It’s anyone who has death benefit needs that sees benefit in accessing tax advantaged money.

Insurance companies offer a wide variety of cash-value or permanent life insurance products with different features and benefits. It’s important that you and your clients do your research before selecting a life insurance policy to ensure that you understand how its features and benefits work, as well as what fees and charges are associated with the policy.

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Income Now, Later, Whenever

Income planning is integral to the service we provide to the producers who work with us. We take it quite seriously, and as such we’re very good at helping you determine the appropriate income strategy for each one of your clients.  Whenever we get to talk about income planning, we start with one basic question that really helps us filter out the myriad of income planning options.

Does your client:
a) need income now
b) need income later
c) want an income stream that can be turned on whenever they need it

For the purposes of this post we’re looking at this strictly from an income perspective; rest assured every option mentioned has at least some level of death benefit protection.

Let’s further simplify by using the same client details for each scenario:  Jane, a 55 year old female with $125,000 in non-tax advantaged accounts.

Need Income Now

Jane is a recent widow. Her husband had done all the budgeting and bill paying. She really needs a set income she can count on to pay her fixed expenses. By putting the $125,000 into a SPIA we can generate $582.19 per month or $6,805 per year. In Jane’s case, since there is no tax-deferred accumulation, there are no pre-59 ½ penalties on SPIA income.

Need Income Later

Talk about options. If Jane is planning for income down the road in the retirement years, there are multiple ways to go.  Let’s focus on two options from completely different sides of the spectrum.

Jane can go the simple route and pick a date in the future to start guaranteed lifetime income.  If she uses a deferred income annuity (DIA) with a 12-year deferral period (age 67), she would receive $1,312 per month or $15,240 per year.  The DIA throws off a nice amount of income, but there are drawbacks with the lack of flexibility and accumulation potential since this is a pure income maximization strategy.

Alternately, Jane could use cash value life insurance to generate income. This kind of plan is often referred to as a LIRP (life insurance retirement plan).  Life products (usually indexed universal life policies) can be configured to illustrate planned withdrawals for supplemental retirement income.  Unlike an annuity, these withdrawals would be tax-free as opposed to any annuity option that has at least some portion taxed, not to mention the outstanding death benefit leverage.  Be aware, most illustrations would need to be run using non-guaranteed interest rates and the money isn’t guaranteed to last a lifetime.  In Jane’s case, she could use her $125,000 for a 5-pay premium outlay and start generating $12,624 at age 67 ($17,533 pre-tax equivalent assuming a 28% tax rate) which would last until age 87.  Again, with this plan though perhaps not the best vehicle for generating pure income, it’s important to remember the other benefits that come with purchasing a life insurance policy.

Income Whenever

Jane is still working, so a fixed income isn’t that important today, but she recognizes the benefit that lifetime income provides. She has no idea when she would want or need an income stream to begin. By putting the $125,000 in a fixed index annuity with an income rider, her money will continue to grow based on the interest crediting strategy she chooses, participating in some of the index’s gains and none of the losses. At any point, she can activate the income stream.  If she waits 12 years, she can guarantee herself $1,233 per month or $14,798 per year.  The allure of the fixed index annuity with an income rider is the flexibility to take the income whenever you want (or not all if you want to keep accumulating).  So if Jane decides to take the income earlier at 10 years, now she can take $1,094 per month or $13,125 per year.

SPIA DIA DIA LIRP FIA Income Rider FIA Income Rider
Income Generated Annually $6,805 $13,138 $15,240 $12,624 $13,125 $14,798
Wait time Today 10 Years 12 Years 12 Years 10 Years 12 Years

There’s a lot to consider when discussing income with your clients.  All the options discussed here have their place.  As with all the planning we do, these solutions are not one-size fits all.  When you’re looking for the most complete set of options available for your income planning cases, put your trust in Zenith Marketing Group’s team of income experts.  Whether it’s Income Now, Income Later, or Income Whenever, we have the solutions.

All numbers are current as of 1/27/16.

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Humanizing The LTC Conversation

Family looking at the camera in the park

Have your clients considered the impact of LTC on their loved ones?

As I go through my inbox every day, I’m seeing a distinct increase in the number of emails talking about long-term care (LTC). Having written about the importance of LTC for a number of years now, I find it satisfying that LTC is starting to become more and more of a topic that the industry is discussing. What surprises me the most though is that a lot of these messages have been focused on how hard it is to sell LTC, or how to overcome the objections that clients may have, and so on. OK, I get it. LTC isn’t the most pleasant topic to discuss – it’s probably even less pleasant than discussing life insurance. No one likes to think about being chronically ill and needing assistance to do everyday, basic things.

But I think there may be another reason why LTC is “hard” to sell – I just don’t think that most clients can really understand the need. Unless you’re one of the people who has watched a loved one go through a chronic illness and can really grasp what goes into it, it’s just an abstract concept. “Sure, the odds say I’ll need care at some point, but that won’t be me.” Sound familiar? (I may have even told myself the same thing, even though I know better!) We all can more easily visualize leaving our loved ones a death benefit after we pass away (life insurance) or comfortably retiring with enough money (annuities). It seems to me that the traditional LTC conversation would benefit from a different approach.

Traditionally, we’ve thrown numbers and statistics at clients. After all, LTC salespeople (myself included) are in love with statistics – 70% of us will need it, LTC costs this much per month in your state, and on and on. Stats are great, but can you see how they can fall on deaf ears for someone that doesn’t grasp the reality of a given topic? No? Let’s look at it in a slightly different way – how about if I told you the diameter of the observable universe was 28 x 109 parsecs (or 91 billion light-years), or that a 2004 Mustang GT has a displacement of 4606cc with 320 foot/lbs of torque at 4500rpm? Unless you’re an astrophysicist or an auto mechanic (or an enthusiast of either of those disciplines), those numbers don’t mean very much to you, do they? The universe is big, and a Mustang is fast. But do you grasp the reality of how big, or how fast? See what we’re up against? Do your clients really appreciate what both they AND their families will be up against if they need LTC down the road?

I think the conversation would go more easily if we kept it to concepts the average client can identify with; making the discussion more relatable. How about the concept everyone understands – time? For instance, maybe we should ask our clients to imagine the situation where a parent or loved one needed LTC, but didn’t have insurance and the burden of care fell to them. Ask them if they’re willing to change their life to provide that care – how many missed days of work does that mean? Late nights? Weekend plans cancelled? Because remember – caregiving for a chronically ill loved one doesn’t qualify as a Monday to Friday, 9-5 job. (Here come some stats!)

  • 7 million informal and family caregivers provide care to someone who is ill, disabled, or aged in the U.S.
  • Lost income and benefits over a caregiver’s lifetime is estimated to range from a total of $283,716 for men to $324,044 for women, or an average of $303,880.

Let’s use the concept of money. How about if your client just pays to have someone come in to take care of their loved one, or better yet, secures them a spot in a LTC facility? This is a great option, but without insurance, it can get very pricy; government assistance programs such as Medicaid and Medicare don’t help much (if at all). The cost for facility care can vary dramatically depending on location and services provided – in the best cases you’re probably looking at the cost of an average year of college tuition. In the worst cases, you could be looking at several times more than that. Even if their loved one moved in with the client, can the client afford to pay the costs of any modifications or special accommodations their loved ones may need to have made?

Maybe we should look at it from a loved one’s point of view. Let’s face it – many of the things that come with needing chronic care aren’t pretty. A loved one can lose the ability to perform many basic daily functions, such as eating, dressing, toileting, and the like. These can be uncomfortable and even embarrassing to have to ask for help with. Are these things such as eating, dressing, and toileting something a client’s loved one would be comfortable asking them for assistance with? Would the loved one want your client to see them like that? Wouldn’t it be better for their loved ones to maintain their dignity in those scenarios?

None of this is meant to scare your clients, but merely to impress the importance of having the conversation about LTC insurance now – because when it comes down to it, this is the ONLY time they can have this particular discussion. They won’t be able to have it later. The discussion will have changed. And frankly, THAT discussion won’t be anywhere NEAR as pleasant as the one you have today.

As we start to talk about LTC more and more, let’s work together to humanize these LTC discussions. For more sales ideas and product expertise, let Zenith be your LTC expert – make us the first call on your next case.

 

 

 

 

https://www.caregiver.org/selected-long-term-care-statistics

http://news.morningstar.com/articlenet/article.aspx?id=564139