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Is LTCi S till a Viable O ption?

Is LTCi S till a Viable O ption?. ,. What Has Happened. Lack of Sales Training Producer Demands High Administrative Costs Very service driven Large reserves Pricing Low lapse Rate Inflation New types of care emerged. Claims Overview.

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Is LTCi S till a Viable O ption?

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  1. Is LTCi Still a Viable Option? ,

  2. What Has Happened • Lack of Sales • Training • Producer Demands • High Administrative Costs • Very service driven • Large reserves • Pricing • Low lapse Rate • Inflation • New types of care emerged

  3. Claims Overview • Over $7.7 billion dollars has been paid through 12/11 • Youngest claimant 27 • Longest claim 18.7 years • $1.7 Million is the largest single claim • 14+ years, annual premium was $881 • 71% of claim dollars have been paid to female claimants • 50% of all claim “dollars” are paid to claimants with mental disorders including Dementia

  4. Recent Changes in Industry • Carriers Exiting the Industry • AIG • Allianz • Berkshire/Guardian • Equitable • Penn Treaty • MetLife • Prudential • Transamerica • Carriers Coming back in • Transamerica • Thrivent

  5. Changes in Industry • No one wanted to be the “Lone Wolf” • Lifetime Benefits • 3.7% sales in 2011 • Shortened Premium Payment Options • Less than 8% of overall sales • Adjusting the Current Pricing • Rate Increases

  6. Today’s Top Carriers • Key Carriers • Bankers Life and Casualty • Genworth Financial • John Hancock • LifeSecure • MassMutual • MedAmerica • Mutual of Omaha • New York Life • Northwestern Mutual • State Farm • Transamerica • United of Omaha

  7. What to Expect • Premiums are not going to go down • Changes in Underwriting • All relates to claims • Do not take risks • Family History • More “lifelike” underwriting • Updated Pricing • Sex Distinct • 5% Compound No Longer Affordable

  8. New Designs • Linked Benefit Products • Single Pay Life Insurance and LTCI • Life Insurance with a LTCI rider • Simple Product Design • Evolution • LifeSecure • Others? • Don’t try to Cover Entire Cost

  9. What fits • What is your Client looking for? • Linked Benefits • Repositioning existing assets and exercising leverage and control • Helps overcome common objections • Traditional LTCI • Using a portion of your client’s portfolio to pay the premiums • Business owners can deduct a portion of the premiums • Best leverage of premium dollar

  10. Tax Incentives • Qualified Premium Limits for 2013 (Attained age before the close of the taxable year) Per Diem Limit for 2013 is $340 per day

  11. The Need is NOT Going Away • 2 out of 3 over 65 will require long term care • Average life expectancy after someone is diagnosed with Alzheimer’s after the age of 70 is 4 to 7 years • Cost of care today verses the future • 50% of people entering a care situation are penniless within one year • It IS going to happen so how are you going to pay for it

  12. Who Does it Really Protect? • Spouse • Children • Grandchildren

  13. Funding the Cost of Your Chronic Disability • Plan A: Keep the Risk (Don’t Plan) • Can happen at any age • Directly and immediately impacts monthly cash flow • Impossible to predict the financial impacts on an individual and their family until the event happens • Monthly distributions are systematic and in most cases, taxable • Plan B: Transfer the Risk (Do Plan) • Provides liquidity on a tax favored basis

  14. Keeping the Risk • Choose an investment class that does not have any market exposure such as CD’s or Treasury’s • Make an adequate lump sum investment that can match what LTCi delivers by Y20 • Promise yourself that you’ll never touch this money for any purpose other than long-term care • How much would this be?

  15. Our challenges • A lack of understanding of what role long-term care insurance plays in the client’s family and finances. • Not having a clear grip on how to overcome sometimes debilitating objections. • Not understanding the competition to LTCI in the form of alternative funding sources such as Medicare, Medicaid, Self Funding and or the VA. • Not being able to confidently recommend the proper coverage to achieve maximum benefit for the client

  16. Typical ltci buyer • Female ages 55 to 64 • Married with Adult Children • Working in a white-collar profession; not yet retired • College educated • Homeowner with 11 or more years in current residence • Affluent: upper middle class with a household income of $100,000 or more • Planner • Exposed to LTC issues • Reasonable and family oriented

  17. Primary reason for purchase • Protect Assets • Security/Peace of Mind • To cover the cost of LTC services possibly needed • Do not want to be a financial burden • I know I’ll need it • Know someone who had trouble paying for LTC

  18. Primary reason for purchase • Getting older • Do not want their children to take care of them • Make sure they are taken care of • Family does not live close • Choose type of care • High cost of LTC Services

  19. Life events that triggered purchase • Planning for Retirement • Client or their spouse retired • Loved one needed LTC • Change in financial situation • Change in marital status • Birth of a child or grandchild

  20. Where the client learned about LTCI • Family or friends • Information from an employer • Financial Advisor • 8.9% • Insurance Agent or Broker • 8.7% • Brochure – Insurance Company • Advertising – television • Advertising – magazine • 55% of people who made the first contact with an agent about LTCI

  21. Reason for buying now • Less expensive to buy now • Know they are getting older • Planning for retirement/future • Seemed like a good idea • Loved one passed away • 70% of people discussed buying long term insurance with family members or friends

  22. Questions to Ask • What is your written strategy? • This should not include their spouse and/or children • How will the costs of extended care impact your family and portfolio?

  23. P.S. • Unwritten Rule #1 • Women lie about their weight • Unwritten Rule #2 • No healthy person will willingly pay $10,000 a year for LTCi • Unwritten Rule #3 • If a client’s daughter approaches you on behalf of a parent/in-law, there is already a problem • Unwritten Rule #4 • All clients believe they are healthy

  24. P.S. • Unwritten Rule #5 • If you are taking an application for a couple, and you discover a health “issue” – STOP and “close the case again”. • Unwritten Rule #6 • Rate increases are inevitable - manage your client’s expectations LTCi is a “sale” not an order

  25. Questions? Susan Carlson 480.718.3153 (Direct) 800.352.3359 (Toll Free) 602.486.4557 (Cell) scarlson@ipg-us.com www.ipg-us.com

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