Moving the Ball

-by Woody Wodchis

American football game

I recently had a conversation with Dusty Farber regarding a business case – one that moved from being “stuck in the mud,” to being a bigger deal than originally anticipated. We talked about how so many routine cases could chew up time, often because all the necessary information isn’t readily available for clients and advisors to make an informed decision.  Dusty gave me an example of exactly this scenario, and the approach he took to get his clients to take action and move forward with not only their business planning but their personal planning as well.

Dusty was introduced to two partners who had started a clothing distribution business approximately eight years ago. They had implemented a buy-sell agreement a couple of years into the business, based on the estimated business value and a multiple of compensation. As a result, both partners (one in her thirties and the other in her fifties) purchased $1,000,000 of term insurance. As time passed and the business became more successful, the partners asked Dusty to review their buy-sell agreement and any other business protection needs.

Knowing that the business was on the small side, Dusty was prepared for the “valuation discussion,” one that he previously had hundreds of times in his career. “Business owners always overestimate the size of their business,” says Dusty, “and based on my gut instinct, I knew there was no way they would be willing to pay $10,000 – $15,000 for a proper valuation. But since the referral source was a good one, I wanted to help these clients.”  Still, it was difficult for Dusty to make recommendations without knowing more about the business, including how much it had grown over the past several years.

Having been in this situation before, Dusty pulled an arrow from his quiver that he had used several times previously – a business valuation/buy-sell review service, offered by a leading and highly respected life insurance company.  The clients agreed to do the review and Dusty was not only able to bring a valuable process to the table, but also a professionally done deliverable. Having used this service many time before, Dusty offered this: “My best guess is that these valuations are within 10-15% of the real value, and are light or heavy based on the industry and relevant expertise. The recommended death benefit can always be adjusted based on what we know about sales and revenue trends.” Both the clients and advisors were pleased with the report and, as a result, implemented $2,000,000 of term life insurance on each partner. Football Equipment and Chalk Board Play Strategy BackgroundThe business valuation/buy-sell review helped to quantify their protection needs and bring context to the planning process or as Dusty puts it, “The report moved the ball and the price was right.”

And there’s very good news about that price.  The Business Valuation/Buy-Sell Review is a complimentary no-cost service from the Principal Financial Group.  The process is easy as Dusty attests. “Everything is submitted electronically – you just need three years of financial statements or tax returns, and then press a button. Principal’s attorneys and CPAs in their Advanced Solutions department review and have an informal business valuation back to you in five to seven business days.” Dusty also added another important point.  “The cool thing is that, besides coming up with a valuation number, they also review the existing buy-sell documentation and recommend important updates and changes.  Those reviews take roughly 20 business days.”

There’s more to the story. The clients asked Dusty to review their personal and estate planning needs as well. The legal work to update the buy-sell agreement, and draft trusts and wills resulted in fees of $15,000, which went to the attorney who first brought Dusty into the case.  Additional life insurance  purchased by the clients and spouses brought total commissions earned on the case up to the $40,000 range. With a smile, Dusty reminded me that, “we haven’t put the DI in place yet.”

Dusty has used the Principal service six times and sold insurance to the respective clients five times – not a bad batting average.  Even though this professional service is at no cost, Dusty never felt pressured to sell Principal products. “I never felt any heat to recommend or sell Principal’s product – it just never came up in the process.”  In this case, because of competitive pricing combined with flexible underwriting, Principal did earn the bulk of the $40,000 in life premium and is looking good for capturing the Disability Income business as well.

Football Player

Need to move the ball on a business case?  Take advantage of the Business Valuation/Buy-Sell Review service from the Principal Financial Group. Let us know how we can help!

 

Underwriting – Where are we today? Where are we headed?

-by DuWayne Kilbo

Being fed by our aging producer population, the under-insured and under-served markets, the $15 trillion plus insurance gap, and the search for new and easier ways to access markets—especially the technologically inclined millennials— life insurance companies are beginning to turn the traditional underwriting process on its head. And early results indicate that they are finding some success.

Much of what we have seen so far has been positive and a welcome transformation of an otherwise archaic, invasive and time-consuming insurance acquisition process.  However, these changes have implications both for distribution and for how business will be processed and underwritten in the future.  So where are we today?  What major underwriting process change are we seeing now? Where are we headed down the road? What implications do these changes have for you and your clients?

Solution and Strategy Path

The top underwriting process change we are seeing today is “Triage” or Accelerated Underwriting (AU). While there have been other successful efforts to use predictive analytics (such as lab scoring) in underwriting during the past few years, the AU process takes predictive analytics to new levels where traditional underwriting tools used to qualify applicants for coverage, such as paramedical exams, vitals and fluids are being replaced with noninvasive third-party data.

Anecdotal carrier information indicates that up to 50% of applicants who go through the AU process may forgo traditional exam requirements and be issued coverage in as little as two days. However, this number is a bit misleading since younger applicants, those age 45 and lower, qualify at a disproportionately greater rate than older applicants.

AU has taken a firm hold in the industry with carriers adopting it as a standard underwriting process or studying it closely with the idea of rolling out the process within a short period.  Within a couple of years this could be “the” underwriting process that distribution must adhere to for all carriers up to a certain applicant age and face amount.

So what are the pluses and negatives for AU?

Overall, this process is a positive for distribution. It’s a win if on average up to 50% of our insureds, within an age and face amount range, are not required to complete a paramed exam, or blood and urine specimens, avoiding the potentially adverse findings that sometimes come from these requirements. This abbreviated underwriting process can also cut days or weeks off the underwriting approval time, which is always a good result.

On the negative side, we lose some control over the application and underwriting process. AU usually requires a carrier teleinterview, and, due to the third-party sources of information and algorithmic modeling used in this process, we cannot be 100% sure that an applicant will qualify for coverage without the need for traditional exam requirements.  In view of this, it is important to serve up these types of programs as a possibility, and not as a promise that an applicant will not need to submit exam requirements.

What about the future?  It started with AU, but where is underwriting going? What’s coming down the road?

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One of the most profound risk assessment paradigms being discussed today is the concept of Underwriting Agility.  This model suggests that applicants should be underwritten and priced independently, based upon their unique set of risk factors. In addition, underwriting requirements will be based upon the risk profile and available information for each applicant rather than the typical age/amount underwriting chart. With this model, insurers will request more information on higher risk applicants and less information on lower risk applicants. When combining this information with third-party data sources and analytics, Underwriting Agility will provide a more complete and holistic underwriting assessment.

Bottom line, with Underwriting Agility not everyone will follow the same process and applicants will be priced on a continuum according to the risk they represent, with premium being specific to the individual – much like auto insurers do today.  This is unlike the current underwriting rating bucket system we have today that attempts to match and price an applicant in a category of similar individuals.

Here’s an example of what we are talking about:  Let’s say an age 60 male with a heart attack history five years ago applies for coverage.  Before putting the applicant through a medical exam, the carrier downloads a copy of his electronic medical records and/or medical record codes and finds his records are thorough and complete with all necessary follow-up doctor care. Other than the absence of a urine result, the applicant has had reasonably recent and favorable EKG and blood results, vital signs and other medical results comparable to those required for an insurance exam.  His data search indicates several positive risk attributes which analytical modeling suggests provides a mortality “lift” or enhancement. Based upon the information at hand, the carrier will only request a current urine specimen.  If the results of the specimen are normal, a premium quote can be tailored uniquely for this applicant, based upon the combined medical history and risk attributes.

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This model will require an enormous amount of R&D to get right, along with new data elements, data sources (electronic health records, etc), predictive modeling and other things.  So it may take some time to develop and roll out. However, as the industry accumulates more information and access to new data sources, it will be here sooner than we realize.  Also, there may be an opportunity with this type of model to provide pricing incentives for the continuation of a healthy and active lifestyle, which can have a positive impact on product performance.

So what are the pluses and minuses of Underwriting Agility?

This process certainly has positives for distribution. Like AU, it’s a win if we don’t need to expose an applicant to the time and hassles of an unneeded paramed exam and the potential adverse findings that may come from these results. It can also cut days or weeks off the underwriting approval time, which for many reasons is always good.

However, this model also has significant negatives in that we may lose negotiation leverage with underwriting due to the amount and reliability of data collected and the ability of analytics to predict outcomes with a high degree of certainty.  In effect, the “price will be the price.” Risk classification and underwriting exceptions may be made, but based upon different criteria, relating to individual characteristics and the analytical modeling completed.  This model will require us to be well educated about data and analytics before it is implemented so we understand the pitfalls and potential areas for further underwriting discussion and opportunity.

It is important for us all to stay ahead of the winds of change and understand what these changes may mean to us and to our customers. We have seen more change in underwriting the past two years than in the previous decade.  Technology will be a driver of change and the pace of change will accelerate as new data sources are discovered or connected in new and unique ways, and as predictive analytics becomes even more dependable and refined. As all this comes together, it is certain that underwriting will become more “personal” and specific to the individual, along with premium pricing as well.  It is imperative to find ways to adapt and thrive as we push ahead in any new paradigm.

Golden key and puzzle

Throughout our 40 year history, Windsor has responded and evolved by creating unique advantages for our customers. As with any potential change there comes opportunity. We are committed and will stay engaged, keeping our finger on the pulse of our business to create advantages for those around us, no matter what the change may be.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Navigating 101(j) – an ounce of prevention can avoid a ton of liability

-by Ron Bielefelt

 

I was very annoyed.  It was the first application that I took for a key-person life insurance policy after August 18, 2006.  The underwriter kicked the application back because the insured-employee did not sign the “Notice and Consent” form, acknowledging that the employer was both the owner and beneficiary of the policy. When I suggested to the underwriter that we get this signature at delivery, he informed me that the policy would not be issued until the signed “Notice and Consent” was received.  This was bull, I never had to get this form in the past.  So, what was the big deal?

It turns out that this is a very big deal.  The rules had changed, and a new subsection had been added to §101 of the Internal Revenue Code.  The general rule of that subsection is that employer-owned life insurance death proceeds are taxable to the beneficiary to the extent they exceed cost basis, unless the requirements of 101(j) are met.  So where did this subsection come from?  Previously, my knowledge of 101(j) was non-existent – I even thought it might be an off-ramp on the famous 101 freeway in Los Angeles.  Knowing that I couldn’t change the map, I needed to learn more and find a way to navigate my client through 101(j).

Pensive businessman with maze

Here is what I found out.  Congress adopted these rules to prevent the perceived abuses of what was sometimes referred to as “janitor life insurance,” issued  for windfall profits.  These plans proliferated in the 1980’s as a form of Corporate-Owned Life Insurance, or COLI.

In a typical broad-based leveraged COLI transaction, a corporate employer would purchase policies on masses of lower-level employees, sometimes without the employees’ knowledge or consent. When an insured employee died, the company received the death benefits, and the employee’s family typically received either a small portion of the proceeds or nothing. These policies could remain in place even after the employee quit or retired.

In 2006, this all changed.

The COLI Best Practices Provision within the Pension Protection Act of 2006 became law on August 17, 2006. This provision was designed to codify industry best practices regarding employer-owned life insurance and amend the Internal Revenue Code by introducing conditions that must be met in order to exclude from gross income the proceeds from business-owned life insurance. The Act amended Section 101 of the Internal Revenue Code by adding subsection (j), “Treatment of Certain Employer-Owned Life insurance Contracts.” Briefly, the new subsection treats all employer-owned life insurance death benefits as taxable income, to the extent the proceeds exceed the premiums paid.  It also provides for exceptions to this rule, most notably requiring that the insured-employee sign a “Notice and Consent” form acknowledging that the employer is the owner and beneficiary of the policy.

[Related: The New Law for Business Life Insurance: Understanding Section 101(j) and Repairing Noncompliance]

Because of that change, employers today who purchase key person insurance and other forms of employer-owned life insurance need to watch out for a potentially costly trap — if the proper forms aren’t completed before the policy is issued, the death benefit is taxable, when it would otherwise be tax-exempt.  “The result is draconian,” says Jonathan Forester, a tax lawyer with Greenberg & Traurig in McLean, VA.  “If you’re expecting a death benefit of $10,000,000 and the IRS says you owe taxes, giving up 50%, if you’re a widow counting on these proceeds, that’s devastating.”

In a recent conversation with a hedge fund manager who bought $100 million of corporate-owned life insurance on his partner, but hadn’t complied with the rules of §101(j), we mulled over the options available to remedy the problem:

  • Go back to the carrier to get the policy reissued – providing that the carrier is willing and able to do this.
  • Cancel the original policy and issue a new one hoping that the employee is still insurable.
  • Do nothing and hope for the best – a gamble you do not want to take.

As you can see, the options are limited, difficult and potentially downright dreadful.  Now, I am no longer annoyed and have accepted reality. IRC Section 101(j) is far more important than my original take, and compliance with its requirements before policy issue is imperative for both you and your client.

An ounce of prevention avoids a ton of liability.

An excellent resource on §101(j) is a “White Paper” from Principal Financial Group.  It is a comprehensive piece that covers most of the details of IRC Section 101(j) in a “Question and Answer” format.  For example:

  • If the general rule of Section 101(j) is that employer-owned life insurance death proceeds are taxable, then how do death proceeds payable to an employer, from employer-owned contracts, qualify as tax-free under the general rule of IRC Section 101(a)?
  • Are death benefits from employer –owned policies payable to an insured employee’s heirs eligible for tax-free treatment under 101(j)?
  • What information must be furnished to the IRS in order to meet the new information return requirements?

As you complete annual reviews for your business clients there may be opportunities where replacement of non-compliant policies could save your clients thousands if not millions in income-taxable death benefit.  It will be worth your time to know the rules.

Download the “White Paper” and become familiar with Section 101(j). There are opportunities waiting for you.

 

Hire a World Class Marketing Organization – for $1 a Day

-by Marc Schwartz

With September’s arrival around the corner, our industry once again celebrates Life Insurance Awareness Month (LIAM). Created and produced by LIFE Happens and promoted by carriers and industry organizations, LIAM is a purposeful effort to raise consumer awareness with respect to client vulnerabilities and the solutions we deliver. Go to LIFE Happens to use all of the tools and resources available to help promote LIAM.  Danica Patrick is back as LIAM spokesperson with all-new videos promoting financial fitness.

Life Happens

For one month each year our industry makes a concerted effort to shine a spotlight on our products and the services we provide.  But what about the other 11 months of the year? How do we maintain, and take advantage of, the momentum generated by LIAM? Just as important, where do we as advisors fit into the equation? If a consumer is motivated to take action and handle their protection needs, who will they call and why? Millions of Americans need help — but will they ask you for direction?confusion1

As much as the internet might help consumers research their protection needs and potential solutions, the majority still turn to life insurance professionals to help them navigate the maze of companies and products.  And there remains a very important role to be played by a trusted advisor: simplifying what is complex and helping consumers sleep at night. How are you and your firm positioned given this enormous opportunity?  Think about the ways you need to market to Generation X and Millennials who now represent 145 million wallets.  (Related:  Millennials overtake Baby Boomers as America’s largest generation – Pew Research Center)  Marketing is now a multi-faceted, comprehensive and ongoing process that is a critical addition to efforts that are event driven.  You need to be and remain visible and available to clients and prospects.

If you are interested in expanding your business by addressing the protection needs of a huge and affluent, yet untapped market, then you need to be constantly  connecting with prospects and building your brand.  LIAM is a one-month program to soften the beaches, so to speak, but your disciplined and ongoing consistent push will ensure success. But how to do this?

 

Did you know you could plug into a cutting edge and comprehensive marketing platform for a cost of next to nothing? To me, what the Life Happens organization has built is one of the most powerful yet under-used marketing engines available in any industry.

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Specifically, the Life Happens Pro package gives you the tools to push your brand, educate consumers, and establish yourself as a trusted advisor. Keep in mind that this is all about helping consumers understand their protection needs and vulnerabilities, be it life, disability or long term care, and there is never a product or carrier push. Fully customizable resources include:

 

  • Flyers, brochures and infographics
  • Social media content
  • Real life video stories
  • Turn-key email marketing campaigns
  • Need calculators
  • Insurance planning tools

Although there is a base level of tools available at no cost, the Life Happen Pro Plus package at $39/month is really where you want to start – and it offers a 30-day free trial so you can kick the tires. If you are truly interested in the future of your business and helping an underserved market, then I highly recommend this package. You will easily expand your brand without your budget taking a beating.

You can contact Life Happens directly at mailto:support@lifehappens.org or (844) 824-5433; and feel free to contact me directly at mailto:marc@windsorinsurance.com or (800) 410-9890.

Happy 100th Birthday – There Goes Your Life Insurance

-by Michael “Woody” Wodchis, FLMI, ACS

Burning birthday candles number 100

The July 20, 2017 Wall Street Journal article, “Happy 100th Birthday!  There Goes Your Life Insurance,” points out a major hidden flaw in older life insurance contracts: the risk of living too long. In the mid-20th century, the life insurance industry, along with government regulators and actuaries, did not expect or anticipate that more than a handful of policyholders would reach age 100.  But today, some insureds fortunate enough to approach these “golden” ages are surprised to learn that their policies will “endow”– that is, coverage will end and any cash values will be paid to the policy owner. The Journal describes how one of those age 99+ policy owners, faced with losing all or part of what he originally intended to purchase – income tax-free death benefit for life – is taking his case to court.

For over a decade, “the industry has used age 121 as the standard maturity date in new contracts,” the newspaper reported. “But an unknown number of older contracts with the 100-year-old limit remain in consumers’ hands.” Many carriers subsequently added an Extended Maturity Rider (EMR) to their in force block to protect their policyholders against outliving their coverage, or provided other assurances that policies would stay in force indefinitely at the request of the policy owner, subject to some limitations (on loans or withdrawals of cash, for example).  Joseph Belth’s recent blog (The Age 100 Problem – The Achilles Heel of Life Insurance – Lands in Court) outlines the problem, and explains both the ways in which many carriers responded to this dilemma, and how others  simply chose to ignore the problem and let the original contract language prevail.  This recent press reinforces an absolute truth, as obvious as it may be, about life insurance death benefits: the policy must be in force upon the death of the insured for an income-tax-free death benefit to be paid. If a policy is 471267101cancelled, or endows as mentioned previously, any gain over the investment in the policy – premiums paid – is taxable to the policy owner.

 

 

 

The underlying problem, and opportunity, we have in the life insurance industry is to be aware of, and offer solutions for, longevity risk.  As mortality continues to improve, more of our clients will live into their 80s, 90s and even beyond 100. Even though carriers offer continued protection beyond this point, these improved product features won’t help if the policy is not in force.  Obviously, this is very important when the product is purchased for death benefit protection rather than other needs, such as supplemental retirement income.

We ask our clients to trust in our advice as well as in the suitability of the products and carriers we recommend. Where protection is the primary objective, what can we do to meet and exceed client and beneficiary expectations?

 Funding

Presenting the lowest premium product may help win a case but may not be best for the client in the long term. Whether an existing policy or a new sale, all products need to be appropriately funded so that they have a realistic chance to last to life expectancy (at a minimum) and well beyond. With hopes of AG 49 leveling the playing field, we have actually seen indexed universal life illustrations become increasingly complex as many carriers project guaranteed or non-guaranteed bonuses. Unfortunately, “illustration games” do little to help instill a sense of certainty and predictability down the road.

Monitoring

Beyond your own servicing systems to ensure that clients are regularly communicated with and understand how their policies are performing, work with carriers with effective and proactive processes in place that clearly track how policies are doing, be it behind, on, or ahead of schedule. Just as important, these communications have to provide easy to understand guidance relative to adjusting premium payments on an annual basis.

Guarantees

To avoid unexpected and unpleasant surprises down the road, take advantage of low cost guarantees available today. This is particularly appropriate for risk-averse clients who would pay “a little more” to lock in future certainty. Once the exclusive province of no lapse guarantee universal life and whole life products, there are now very competitive variable and indexed universal life products available today with extended guarantees, ranging from beyond life expectancy all the way to lifetime. By using these low cost guarantees, we take can take a lever out of the hands of the insurance company and help clients sleep at night.

Living Benefits

As clients live longer, their chance of living with extended and debilitating illnesses also increases in direct proportion. The various living benefit riders now available on life insurance products can provide much-needed funds to help offset the cost of care. In addition, there are riders that allow the policy owner to “convert” death benefit into a stream of retirement income…a powerful feature for clients who have lived longer than they might have expected.

Historically, the insurance industry has addressed longevity risk with its annuity products – products designed to provide an income that clients could not outlive.  Today, our professional recommendations must also consider a client’s potential longevity risk as it relates to life insurance products. As Joseph Belth explains:

“It is an understatement to say the age 100 problem is serious. Indeed, I think the problem is the Achilles heel of life insurance. The bedrock principles of life insurance marketing are the income-tax-deferred inside interest and the income-tax-exempt death benefit. The problem is so serious that . . . the companies do not want to discuss the matter. I further believe that neither the Internal Revenue Service (IRS) nor the income-tax-writing committees of Congress want to discuss the matter.”

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Despite what the companies, the IRS or the Congressional committees might want, your clients need you to review their life insurance and examine the contracts for the kind of longevity risk that Belth and the Journal describe. If you find that you’re not sure how to start or what to look for, call us at Windsor.  We’ll be glad to help.

 

 

 

$522 Billion

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A 2014 study by the RAND Corporation estimated the cost of informal caregiving in the US at $522 billion:  “Across America, people spend an estimated 30 billion hours every year providing care to elderly relatives and friends. The cost is measured by valuing the times caregivers have given up in order to be able to provide care.”  Those numbers continue to grow in 2017, as the baby boomer generation ages and creates greater demand for long-term care services.

Numbers like this get everyone’s attention, and long-term care (LTC) is a concern that is at once personal, cultural and political.  Those of us in the insurance business know there is a solution – one that’s been around for several decades:  Long-term Care insurance (LTCI).  But what’s happening to sales of LTCI amid these growing concerns and exponentially increasing numbers?

Six leading LTCI companies recorded increased policy sales in 2015 compared to their sales during the prior year according to the American Association for Long-Term Care Insurance. “This is a positive sign as is the fact that one new insurer began selling policies in 2016,” declares Jesse Slome, director of the American Association for Long-Term Care Insurance (AALTCI).  However, according to Slome, overall sales of traditional LTCI continued to decline compared to the prior year.  “The number of new policies (lives) sold in 2015 was down around 20 percent.”

The problem, according to Slome, is that, “Consumers we speak with perceive that LTCI protection is expensive, that insurers seek continual rate increases, and they express concern after reading online reports about denied claims.”  Though that perception may be mistaken in some ways (the industry paid over $8 billion in claims in 2015, a 4% increase over 2014), the reality is that sales of stand-alone LTC policies have been steadily declining for 15 years.  But ignoring the problem doesn’t make it go away.

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“Here’s a stunner,” writes Richard Eisenberg for Forbes, “the average American underestimates the cost of in-home long term care by almost 50%,” according to findings in a 2016 Genworth Cost of Care study.  Still, in the midst of this growing disconnect between perception and reality there is a bright spot:  sales of combination and hybrid products with LTC benefits are on the upswing.

In May 2016 The National Association of Insurance Commissioners (NAIC) teamed with The Center for Insurance Policy and Research to create an exhaustive report:  The State of Long-Term Care Insurance: The Market, Challenges and Future Innovations.  In their section on LTCI products, they explain the appeal of hybrids in today’s marketplace:

“The hybrid product market has experienced substantial growth at the same time that standalone LTCI sales have collapsed and stagnated. . . . Hybrid products are appealing to customers, with particularly good alignment with consumer attitudes of the baby-boom generation, which now entirely comprises the target market for LTCI products. The products are fairly simple and can be easily explained to consumers. Generally, the customer has already made a decision to purchase life insurance or an annuity contract, and the step of making it a hybrid product is as simple as a choice to add a rider with LTC features. The customer is simply being advised of an optional feature which allows the ability to access his/her death benefit or account value in the event LTC is needed.”

 

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Hybrids continue to evolve into new and better options for consumers, offering an array of innovative features and benefits, including

  • Residual Death Benefits
  • Inflation Protection
  • Return of premium features
  • Coverage for permanent and/or temporary conditions
  • International Benefits
  • Life policy lapse protection while on claim
  • Non-forfeiture options which preserve some benefits even if premiums are unpaid
  • Skilled nursing home care; adult day care; assisted care; home health care; intermediate care; hospice care
  • Family care (see “$522 billion,” above)
  • Guaranteed Issue contracts (call us for details on this)
  • Payment of benefits in full, through long-term care benefits and/or life insurance death proceeds

Additionally, insureds maintain control of the amount of the payment and enjoy a high degree of flexibility:

  • Insureds choose how much of the monthly benefit is received, up to the benefit maximum
  • As long as the insured is receiving care from a licensed care facility or service, excess benefit payments that are not needed to pay for care can be used for any other purpose
  • Insureds may choose to receive less of the LTC benefit than they are eligible for to preserve their policy benefits, effectively “stretching” the LTC coverage period

 

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With all this flexibility comes a perplexing amount of information and choices.  Which means offering your client sound, informed advice about suitable products becomes vitally important.

At Windsor, we work with these products every day.  We understand the complexities and provisions of hybrid products including Hybrid Life/LTC (Lincoln’s MoneyGuard), life insurance with true 7702(b) Long Term Care (Nationwide, John Hancock, AXA), pre-underwritten/paid chronic illness riders (Prudential, American General), and embedded (free) discounted chronic/critical illness riders (American National, North American, Symetra).

 

We’ve found the money.  The market is worth $522 billion. We can help.

 

 

The State of Estate Planning – 2017

You probably feel as if the field of Estate Planning is in turmoil right now – uncertainty about income taxes, estate taxes and wealth transfer solutions seems so disruptive that Larry Brody, a widely respected estate planning practitioner, has titled an upcoming  presentation:  “What the Hell Do We Do Now?”confusion1

Is it really that bad?  Well, here are links to two excellent and recent AALU publications that may help answer that question.

The takeaways, first from the Survey: “Even in the face of major tax reform, clients and their advisors should remain optimistic and steadfast in their approach to implementing life insurance and legacy planning. Flexible, multi-faceted planning that can address both practical and tax issues is at a premium. Life insurance remains an ideal solution because of: (1) its unique attributes (instant, mortality-based liquidity and cash accumulation and death benefit payments on a tax sensitive basis) and (2) its ability to serve many critical objectives (tax, retirement, and liquidity planning, investment management and diversification, and family security).”

And from the Heckerling Institute: “Overall, Heckerling presenters were optimistic regarding the current planning environment, particularly as this is not the first time that the estate and life insurance industry has dealt with the prospect or passage of major tax changes (e.g., 2010 and 2012). Many planning approaches, like trusts, estate freezes, and life insurance, are inherently flexible and multi-faceted, and tax changes can actually enhance different structuring options and benefits. Accordingly, this environment should trigger thorough audits of client plans and open the door for a dialogue between allied professionals and clients, with interest in life insurance products continuing as both a solution to practical needs and as a complement to other planning approaches.”

We encourage you to read through both the Survey and the Heckerling Institute summary to help clear up some of the hyperbole and confusion that often arises when there’s talk of major tax policy changes.

Golden key and puzzle

If you’re like us, you’ll realize that 2017 will continue to offer plenty of new opportunities for planning and insurance professionals, no matter which way the wind blows.