Share the Value of Long-Term Care and Annuity “Doubler” Income Riders

There are several options financial professionals can use to help their clients prepare a strategy for retirement expenses. Long-term care insurance (LTCI) provides care for those who need long-term assistance in a nursing home, care at home or adult daycare. Some annuity “doubler” income riders can also be used to provide double the annual income for up to five years if the annuitant qualifies.

Communicating the Value of LTCI

Not having some form of LTCI can create tension between families, more specifically between the siblings whom can’t agree on who the parent will stay with. LTCI can help provide peace of mind that loved ones will be able to afford the help that might have been provided by family or friends in years past. Here’s the process I’ve been using for years to communicate the value of LTCI with prospects and clients.

  1. Find out what the prospect knows. Ask, “Do you know someone who needed help to get through his/her day?  What happened?  How did things turn out?  How much did it cost?”
  2. Discuss the types of LTC services available today such as nursing home, assisted living, hospice, adult day care and home health care.
  3. Let your client know that many never expect to need LTC. But then ask, “Do you think it could happen to you?  Why or why not?”
  4. Some people wait too long before looking into LTC insurance and they discover they’re not eligible due to their health. Ask your clients, “How’s your health been for the past five years?  What medications are you taking? What’s your biggest health concern? At this time, it would be a good idea to obtain a HIPPA form so we can get our underwriting team involved.”
  5. Once clients believe it could happen, ask, “If it did happen to you today, what would you be concerned about?” This includes concerns of being a burden on their spouse or family, protecting their family’s assets, as well as maintaining control and independence.
  6. Ask how they feel about other long-term care options, “Knowing what you now know about Medicaid, Medicare and private health insurance, do you believe relying on them is the solution to your needs?”
  7. Once the client has agreed it could happen, and if it happened they would have to pay for it out-of-pocket at a rate of over $90,000 per year1, “How long will your money last without selling your home?”
  8. Ask if they are interested in a LTCI strategy, “If I can share show you a strategy that makes sense to you and is affordable, would you transfer the risk?”

Five Strategies for Long-Term Care Expenses

Once your clients agree, you can share these five options that are currently available to them:

  1. Self-Insure
    • This means your clients don’t fill out any paper work today and what was mentioned before is not important to them at this time. Expenses will come out of their pocket if they need some form of care.
  2. LTC Insurance
    • Several carriers have left this market space for many reasons. What you and your clients should know is this coverage can be expensive and difficult to get approved through underwriting. If your client is looking for the most thorough coverage, LTC insurance remains the most appropriate coverage and we offer carriers in this market space.
  3. Linked Benefits
    • This has been a popular solution over the past several years. Unlike traditional life insurance, which just provides a death benefit, or long-term care insurance that only pays for qualifying expenses, a linked benefit policy has a death benefit, maintains a cash value and can provide income tax-free payments for qualified long-term care related expenses.*
  4. Living Benefits
    • Many permanent and term life insurance offer advantages of exciting living benefits that can be added as a rider to the policy at an additional cost. In some cases, these benefits do not subtract from the death benefit, as accelerated benefits do. They’re in addition to whatever death benefit is paid upon your passing.**
  5. Annuity “Doubler” Income Rider

The Annuity “Doubler” Income Rider Strategy

A concern may be that with living benefits in a life insurance policy, linked benefits and LTCI require the insured to go through underwriting. Annuities do not require underwriting, but they do have financial suitability standards to qualify for the annuity. Our sales and suitability department can help you with this. Several insurance companies offer income riders that provide a lifetime income.

So why am I talking about annuity income riders?  Several income riders offer a feature referred to as a “doubler”.  If the annuitant can’t do two out of six defined activities of daily living, are confined to a nursing home or hospital for specified amount of days, or become cognitively impaired, the annual income the annuitant would receive due to the income rider could be doubled for up to five years. That extra money could help with medication, home remodels, paying for home care, etc. After the “doubler” has stopped, the annuitant will continue to receive their regular annual payment they were receiving originally. We must keep in mind that once these doublers are turned on, the accumulation value of the annuity is exhausted at a more rapid pace.  This would impact the potential death benefit that beneficiaries could receive.

If you are not currently selling LTCI and are interested in providing more strategies or want to discover which carriers offer the annuity “doubler” income riders, schedule a 15-minute call with a member of the RAM GROUP team.

Originally published and posted by Oscar Toledo, of PartnersAdvantage, February 27, 2019