tag:blogger.com,1999:blog-50415002082349893152024-03-08T04:14:15.794-08:00OneSource BrokerageNews, updates, and discussions from the world of disability and long-term care insuranceBrent Lamon, RHU, CLTChttp://www.blogger.com/profile/14666087183945397363noreply@blogger.comBlogger18125tag:blogger.com,1999:blog-5041500208234989315.post-46948948167143140362013-06-11T13:09:00.002-07:002013-06-11T13:09:43.703-07:00Small Policies Can Equal Big Savings for Female Business OwnersI am sure that you have noticed that premiums for disability insurance are much higher for women than they are for men. Here is an easy way to lower these premiums for female business owners.<br />
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Have her buy coverage on other employees. When she buys a DI policy for at least 2 other employees, it creates a multi-life case. This means that she will not only receive a premium discount of anywhere from 15 to 20 percent, she will also receive unisex rates with many carriers. The combination of the two could easily save her 50% off of her standalone rate. This savings will more than pay for the other 2 policies she is paying for.<br />
And, it creates an opportunity for you to sell additional premium. How? Most likely, the owner is not going to buy "Cadillac" policies on the two employees. Just very basic, low-cost coverage. You then have the opportunity to talk to the other employees about purchasing additional coverage on a voluntary basis. Emphasize that not only is the employer paying for their basic coverage, but it gives them the ability to purchase the additional coverage at a highly discounted rate.Brent Lamon, RHU, CLTChttp://www.blogger.com/profile/14666087183945397363noreply@blogger.comtag:blogger.com,1999:blog-5041500208234989315.post-28235357848374553702013-05-15T10:49:00.000-07:002013-05-15T10:49:11.728-07:00Case Study: Covering Executive TravelWhile most people know us for Disability and Long-Term Care insurance, we do field many calls from brokers who start out by saying, "I don't think this is possible, but...". I love getting calls like this. Helping a broker handle a difficult or extremely unique situation is so much fun. This is a brief study of one recent case that crossed my desk.<br />
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A large business was having a corporate retreat. All 300+ of their top executives were attending the event. What happens if 1 or more of the planes being chartered crashes? What type of financial impact would that have on the company? This group wanted to cover this risk, but time was of the essence. The didn't decide to do this until the morning they were flying out. Impossible? <br />
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We were able to issue a group AD&D policy instantly for $1million of coverage per executive up to $50million per plane. They were given a policy statement showing they were covered immediately and throughout the duration of their retreat. They even had 10 days to mail the premium check to the company.<br />
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Fortunately, the entire group returned home safely. But if they hadn't, the company had peace of mind knowing that they were protected. <br />
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Most of you will not come across cases like this on a frequent basis. However, there is a good concept that has come out of this. Covering key employees while they travel for business. It doesn't have to be 300. It can be 1. Whether it is a private flight or commercial; domestic or international...<span style="color: #e69138;"><i>We Can Help!</i></span>Brent Lamon, RHU, CLTChttp://www.blogger.com/profile/14666087183945397363noreply@blogger.comtag:blogger.com,1999:blog-5041500208234989315.post-50207751578192843652012-06-05T08:22:00.000-07:002012-06-05T08:22:35.509-07:00Is Your Client's BuySell Coverage Losing Value?Are you one of those rare agents who has actually funded your client's BuySell agreement with insurance in case a disability occurs? If so, take a moment to pat yourself on the back. Now pull out that policy and read the fine print. You will most likely see language similar to this: "After age 61, the maximum benefit payable is reduced by 20% each year up to age 65 and will provide no benefits after age 65."<br />
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How many of your business owner clients are approaching or already in their 60s? More and more clients are working well into their 60s. This goes for business owners as well. They need to be informed about the diminished benefits they will receive from their Disability BuySell Insurance as they get older.<br />
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How can we help compensate for these decreasing benefits? Offer your clients BuySell+. A special Disability BuySell policy that increases by 20% each year from age 61 until age 65. This will effectively offset the decreasing benefits of their traditional BuySell policy. Need more information or a quote?<br />
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WE CAN HELP.Brent Lamon, RHU, CLTChttp://www.blogger.com/profile/14666087183945397363noreply@blogger.comtag:blogger.com,1999:blog-5041500208234989315.post-61016191076076198052012-04-18T07:32:00.004-07:002012-04-18T13:42:03.471-07:00LTC Insurance...Is the ride over??With Prudential's recent exit from the market, I am getting constant questions about the future of the industry. Why should I sell this? Is it viable? Who is left? All are valid questions. Let's break down how we got to this point and then discuss where we go from here.<br /><br />Long-term care, like all other insurances, is priced based on a number of assumptions. How many people will keep the coverage; how many will use the coverage; how long will they use it, etc. When insurers priced LTC insurance, they got pretty much every assumption wrong. Less than 1% of insureds lapse their policies. There are many more claims than they were expecting. Claims are lasting longer and are more expensive than they ever anticipated. You add all of this up and combine it with the fact we are in an unprecedented period of low interest rates; you get THE PERFECT STORM.<br /><br />So what do we do? Do we pack it up and call it a day? We as agents and brokers exist to serve our clients. To protect them from the potential financial risks they face in life. As long as there is a need for long-term care in this country; we need to find ways to protect our clients from the high costs associated with that care.<br /><br />Here is how:<br /><br /><strong>1. LTC Alternatives</strong><br />Many new products have been developed for those who do not like traditional LTC insurance. Special life insurance contracts and annuities are great funding methods. And now that there are "hybrid" products that don't require a Lump Sum premium, the market for these products will grow at even a faster rate.<br /><br /><strong>2. Change in Policy Design & Structure</strong><br />The simple fact of the matter is that if traditional LTC carriers don't change the way their policies are structured, they can't survive. Provisions like 5% Compound, Lifetime Benefits, and 100% coverage are unsustainable. A fundamental change in policy design is a must.<br /><br /><strong>3. Agents & Planners Must Buy In</strong><br />The last time a company came out with a different, more feasible policy design, many "LTC purists" refused to sell the product. We have to understand why companies are making design changes and support them.<br /><br />The bottom line is this: The need is there. Insurance companies are going to have to make changes in order to remain viable and cover this need. It is up to us to accept these changes and continue to keep working with our clients to help insure them against the costs associated with long-term care. If we don't, the industry is gone and our clients are left with one remaining option: self-insuring.Brent Lamon, RHU, CLTChttp://www.blogger.com/profile/14666087183945397363noreply@blogger.comtag:blogger.com,1999:blog-5041500208234989315.post-72308878511943106812012-03-12T10:32:00.003-07:002012-03-12T10:43:01.060-07:00Top Reasons to Sell Disability Insurance<span style="font-size:180%;">1.</span> <strong>IDI is a great door opener:</strong><br />- Relatively few have it, but it's much needed protection.<br />- Not many have been approached about it.<br />- Since almost all individuals depend on their incomes, they can easily see the direct benefit of the insurance.<br /><br /><span style="font-size:180%;">2.</span> If your clients become disabled, Individual Disability Income (DI) Insurance provides monthly <strong>benefits to help pay for daily living expenses, including premiums on other insurance and investments they have with you.</strong><br /><br /><span style="font-size:180%;">3.</span> IDI can <strong>diversify your portfolio offering and provide attractive compensation</strong>, including generous first-year commissions, strong renewal compensation, and opportunities to earn bonuses.<br /><br /><span style="font-size:180%;">4.</span> <strong>Offering disability insurance to clients is part of your due diligence</strong>. Suppose you help a client with other financial needs, but not income protection. What do you say to the client and his or her family if that person becomes too sick or hurt to work and is no longer receiving a paycheck? You don't want to be in a position where you have to admit there was a gap in the financial strategy you developed together.<br /><br /><span style="font-size:180%;">5.</span> <strong>Disability solutions are available for clients in sought-after markets</strong>, such as business owners and higher-income earning individuals.Brent Lamon, RHU, CLTChttp://www.blogger.com/profile/14666087183945397363noreply@blogger.comtag:blogger.com,1999:blog-5041500208234989315.post-19908918258152346952012-02-29T08:09:00.002-08:002012-02-29T08:12:57.276-08:00Is Group LTD Enough?Your financial future may not be as secure as you think. Although group long-term disability insurance – provided as a benefit by employers to employees – can provide a great foundation for protecting income from the financial setbacks of a disability, it may not be enough.<br /><br />Typical group policies cover just 60 percent of gross income (often not including bonuses or commissions), and benefits are usually taxable. This translates into an approximate “pay cut” of 40 percent after taxes. This would not be enough to sustain the average person’s lifestyle in the event of a long-term disability.<br /><br />Just as it’s important to supplement employer-provided life insurance with additional coverage, most financial experts also recommend individual disability income (DI) insurance as part of a sound financial plan. After all, your odds of becoming disabled are higher than you may think.<br /><strong><br /></strong>Individual DI insurance can help protect your hard-earned savings – and your family’s financial future – from a financial catastrophe. If you were to become disabled, the individual DI policy would pay benefits in addition to any disability benefits you may receive from your employer. And, when you buy individual disability coverage with after-tax dollars, the benefit payments are tax-free.Brent Lamon, RHU, CLTChttp://www.blogger.com/profile/14666087183945397363noreply@blogger.comtag:blogger.com,1999:blog-5041500208234989315.post-72920774633103876132012-02-21T05:52:00.000-08:002012-02-21T06:07:15.190-08:00How To Pay Less For Long-Term Care InsuranceYou can pay $700 annually for a quality long-term care insurance policy. You can also pay $7,000 a year. A significant number of individuals today pay between $15 and $20 a week for this protection. That's a highly affordable way to protect $150,000 to $250,000 of future care. Some 200,000 new LTC insurance buyers who purchased coverage over the past year were studied by the American Association for Long-Term Care Insurance, the national trade organization. Among buyers under age 61, over one-fourth(27.8%) paid less than $999 per year.<br /><br />Here are 5 tips that can help individuals significantly reduce the cost of insurance coverage:<br /><br />1. Leverage Your Good Health: Insurers require that you meet certain health qualifications to obtain coverage. Discounts are provided to those in good health and 62% of applicants between ages 40-49 qualified. The percentage drops to 46% for ages 50-59 and only 38% for ages 60-69.<br /><br />2. Mind Your Birthday: Rates for this insurance are age-based and priced to remain level. Costs will increase each year you wait to apply, generally about 8% annually for each year you delay.<br /><br />3. Right-Size Your Coverage: Some long-term care insurance is always better than none. Factor in other sources of income such as Social Security, pension and 401K plans that can pay costs.<br /><br />4. Buy As A Couple: Most insurers offer significant discounts when a couple buys coverage together. As high as 30%. Buying as a couple will also allow you to add cost-saving options like Shared Care that allows two spouses to share a common benefit period.<br /><br />5. Compare Coverage: Each insurer establishes it's own rates, health standards and available discounts. As a result, virtually equal protection from two highly-rated insurers can vary by between 30 and 80 percent.Brent Lamon, RHU, CLTChttp://www.blogger.com/profile/14666087183945397363noreply@blogger.comtag:blogger.com,1999:blog-5041500208234989315.post-41278907689871759382012-02-13T07:23:00.000-08:002012-02-13T07:35:04.770-08:00Don't Let a Disability Ruin Your Retirement PlanHopefully you have addressed the need for income protection with your clients. Disability insurance is the only way to ensure that your client's financial obligations are met if a disability were to occur during their working life.<br />Have you thought about the consequences a disability will have on their retirement plan?<br /><br />A disability could disrupt their retirment savings plan in many ways:<br /><br /><ul><br /><li>Contributions to Social Security would stop.</li><br /><li>Contributions to an employer-sponsored plan, such as a 401(k) would stop.</li><br /><li>Employer Matching would stop.</li><br /><li>Would their DI coverage be enough to allow them to continue to contribute to IRAs, etc.?</li></ul><br /><p>Fortunately, there is a way to ensure the ability to save for retirement in the event of a disability. Several insurance carriers offer a disability income insurance program that helps clients continue saving for retirement.</p><br /><p>Upon a qualifying disability, this type of program would pay monthly benefits directly to a trust to help your client to continue to save for retirement. This trust then invests the benefits on your behalf. At a set age, you would start receiving income payments from the trust. </p><br /><p>If your client is serious about saving for retirement and has maxed out their personal disability income insurance benefits, this type of program is ideal.</p>Brent Lamon, RHU, CLTChttp://www.blogger.com/profile/14666087183945397363noreply@blogger.comtag:blogger.com,1999:blog-5041500208234989315.post-28202644095472303082012-02-06T07:55:00.000-08:002012-02-06T08:07:05.654-08:00Tips for a Successful Voluntary Multi-Life DI CaseThe individual disability income (DI) insurance industry has seen growth in the voluntary multi-life marketplace. It's an attractive market because it allows:<br /><br /><ul><br /><li>Employers to maintain comprehensive and budget-friendly employee benefit packages to attract and retain employees</li><br /><li>Employees to purchase valuable coverage at a discount through a carrier their employer has endorsed-often with streamlined underwriting</li><br /><li>Producers to see increased referrals, increased cross-selling opportunities, and more commissions</li></ul><br /><p>To be successful, producers need to understand the customer, effectively communicate the offering and work with the employer to establish a plan and enrollment strategy that best meets the employer's needs.</p><br /><p><strong>Understand the customer--</strong>Employers are the "gatekeepers" to employees and a strong relationship with them can result in better support, access to employees and a stronger plan design. When meeting with employers, position yourself as an expert for employee benefits and ask questions that help you deepen your understanding of their workplace and objectives. The knowledge you gain helps you and the insurance carrier develop a plan design that meets employer and employee needs.</p><br /><p><strong>Communication--</strong>Putting benefit decisions in the hands of employees means more education and communication is needed. Most employers welcome assitance in helping employees understand the benefit offering. The best way to educate them and ensure a successful enrollment, is to use a variety of communication methods with messages that address their needs. </p><br /><p><strong>Establish a plan--</strong>Creating a customized plan design and determining the best way to communicate with employees takes time and coordination. Work with an insurance carrier or BGA that offers assitance, such as customized communication templates, employee enrollment packets, and enrollment help. Establish employer expectations by clearly defining your and their role regarding account set-up, enrollment communication, enrollment meetings, and policy delivery.</p><br /><p>Following these tips when selling and enrolling a voluntary multi-life DI program can provide benefits for everyone-you, the employer and their employees.</p><br /><p>For more tips or assitance with your next multi-life DI program, contact OneSource Brokerage.</p>Brent Lamon, RHU, CLTChttp://www.blogger.com/profile/14666087183945397363noreply@blogger.comtag:blogger.com,1999:blog-5041500208234989315.post-19699541857204177152012-01-30T05:49:00.000-08:002012-01-30T06:02:15.886-08:00Will New EVOLUTION LTC Product Revolutionize Industry?A new product from Prudential offers to simply your client's decision process. With the introduction of Prudential <span id="SPELLING_ERROR_0" class="blsp-spelling-error">LTC</span> Evolution, now you can offer a long-term care insurance policy that's <em>easier for you to present</em>, and <em>easier for you clients to buy</em>.<br /><br /><strong>Your clients only need to make one benefit decision: Policy Lifetime Maximum</strong><br /><strong></strong><br />Unlike other long-term care insurance policies that require your clients to think through multiple benefits decisions (regarding the desired daily benefit amount, the benefit duration and the reimbursement method) Prudential <span id="SPELLING_ERROR_1" class="blsp-spelling-error">LTC</span> Evolution takes a simpler approach:<br /><br /><em><strong>Reimbursements are based on Actual Eligible Charges up to the Policy Lifetime Maximum selected by the policyholder.</strong></em><br /><strong><em></em></strong><br />As a result, your clients only need to consider one simple benefit decision when purchasing the coverage: <em>"How much do I want as a Policy Lifetime Maximum?"</em> They can choose any amount desired - from $100,000 to $1,000,000. No matter what amount is chosen, the Policy always pays:<br /><br /><ul><br /><li><strong>80% of Actual Eligible Charges</strong> for covered long-term care services up to the Policy Lifetime Maximum selected by the client</li><br /><li><strong>100% of Actual Eligible Charges</strong> for covered home support services up to a built-in Policy limit of $10,000</li></ul><br /><p>This simple approach to policyholder reimbursements will feel familiar and comfortable to your clients since it works in a fashion similar to most health insurance plans. It also allows you to focus your client's attention on a key benefit - using the Policy as an asset protection tool.</p><br /><p>Give <span id="SPELLING_ERROR_2" class="blsp-spelling-error">OneSource</span> a call for more details or an illustration.</p>Brent Lamon, RHU, CLTChttp://www.blogger.com/profile/14666087183945397363noreply@blogger.comtag:blogger.com,1999:blog-5041500208234989315.post-71728454563933394082012-01-25T06:50:00.000-08:002012-01-25T06:55:15.397-08:00LTC conversation starters that can help you make a family-focused sale<strong>1.</strong> I'd like to talk to you about living a long life and how to be prepared in order to protect your family.<br /><br /><strong>2.</strong> Long-term care insurance is not protection for you. It's protection for your family.<br /><br /><strong>3.</strong> Long-term care is a family issue. Do you have a plan to protect your family? Is that plan funded?<br /><br /><strong>4.</strong> It's not a question of who will take care of you. Your family will because they love you. Instead, it's a question or how your family will take care of you and the impact it will have on them.<br /><br /><strong>5.</strong> Long-term care insurance allows your family to keep the promise they made to take care of you by providing the funds to help them do it better and longer.Brent Lamon, RHU, CLTChttp://www.blogger.com/profile/14666087183945397363noreply@blogger.comtag:blogger.com,1999:blog-5041500208234989315.post-40700548558483507572012-01-17T10:12:00.000-08:002012-01-17T10:42:03.951-08:00Disability Buy-Out & Overhead Expense: Important Extensions of Business Continuation PlanningProducers who work closely with business owners most likely have discussed plans to continue the business in the event of death. A natural extension of this planning is to make your business clients aware of two equally important needs that can be overlooked - disability buy-out and overhead expense coverage.<br /><br />While many business owners plan for the survival of their businesses in the event of death, many don't consider the effects of disability on the firm's future. Or, like many of us, they just don't believe they will ever become disabled. Two types of coverage can help.<br /><br /><strong>1. Disability Buy-Out Insurance</strong> provides funds for the purchase of a<br />disabled business owner's interest in the event of a long-term, total disability.<br />2. <strong>Overhead Expense Insurance</strong> covers operating expenses of a business<br />when the owner can no longer generate revenue due to disability.<br /><br />The two products work nicely in tandem. Overhead expense fills the gap immediately following the onset of disability to keep the doors open. If the disability becomes long term and a buy-sell agreement is in place, disability buy-out can fund this obligation.<br /><br />The market for disability buy-out and overhead expense is primarily small businesses. The owners play an active role in the business and often, their personal service is essential to the business' survival. By offering disability buy-out and overhead expense, you can address the full line of business continuation needs of this market. You'll also be in good position to generate additional compensation by expanding your markets and product lines.Brent Lamon, RHU, CLTChttp://www.blogger.com/profile/14666087183945397363noreply@blogger.comtag:blogger.com,1999:blog-5041500208234989315.post-20590809201231953512011-08-16T07:34:00.000-07:002011-08-16T07:45:52.204-07:00Are You Scared of Disability Insurance?I have had to face a hard truth; that not every financial professional wakes up in the morning wanting to sell disability insurance. In fact, several of my producers have confessed that they will only sell DI when their clients make them. I know that you are probably laughing at this statement, but ask yourself, "Am I laughing because it is so ridiculous or because it accurately describes my approach to DI?"
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<br />Why are some of the most experienced and accomplished professionals in our industry scared of disability insurance? The answer is simple; it is not like riding a bike. If you do not deal with DI on a regular basis, you will forget how it works. There are so many moving parts, definitions and rider; that it is hard to keep up. Because of this, many choose not to broach the subject with their clients.
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<br />What a hole this leaves in your client's financial plan. Your client's income is their largest asset. It is the foundation of every financial plan you make for them. Without it, bills aren't paid, retirement isn't funded, and a legacy is lost.
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<br />So, how do you protect your clients without getting bogged down in the minutia of a disability policy? You focus on the need. The policy is just a financial vehicle used to fulfill that need. Most clients do not need all of the bells and whistles that accompany disability policies. They just need something to help them pay the bills. At its core, all a disability policy does is pay a monthly benefit if you are unable to perform your job due to an accident or illness. That is it.
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<br />Remember to focus on the hole and how a disability policy can fill that hole. You don't have to make it overly complicated. Just think; a duck has made millions off of just saying that it helps if you get sick or hurt and can't work.
<br />Brent Lamon, RHU, CLTChttp://www.blogger.com/profile/14666087183945397363noreply@blogger.comtag:blogger.com,1999:blog-5041500208234989315.post-73152769528812867012011-08-02T08:30:00.000-07:002011-08-02T10:30:23.859-07:00Creating Leverage with Multiple IDI PoliciesIf you have a client whose DI claim is denied, what is the process? First, they have to appeal the decision. Then, if things don't go their way, they may even end up having to sue the company. All the while, your client is without an income and believes that it is your fault. Here is a simple way to help your client that may add leverage at claim time.<br /><br />Diversify. Write 2 policies instead of 1.<br /><br />We have seen examples when a policyholder filing claims with two different companies has one claim approved while the other is denied. While ideally we would like both companies to approve a legitimate claim, look how better off your client may be due to diversification.<br /><br />1. They receive at least some of their disability benefits while working through the appeals<br />process with the other company.<br /><br />2. They can use the fact that one company is paying benefits as leverage with the company<br />that has denied the claim. "They are paying the claim, tell me why you are not."Brent Lamon, RHU, CLTChttp://www.blogger.com/profile/14666087183945397363noreply@blogger.comtag:blogger.com,1999:blog-5041500208234989315.post-79601696449184070772011-03-11T11:17:00.000-08:002011-03-11T11:27:03.530-08:00Guaranteed LTC Insurance PremiumsPredictability is important, especially when if comes to premiums. No one wants a rate increase or even to deal with the poissibility. Unfortunately, rate increases have become increasing common in the LTC insurance market.<br /><br />Carriers blame this on what they call the "perfect storm". Low lapse rates, higher than expected utilization, longer claim durations, and a low interest rate enviroment have forced many carriers to raise rates on their policyholders.<br /><br />What if you could guarantee that your LTC insurance premium would never increase? Would you be willing to pay a little higher premium for that type of security? If the answer is Yes, Asset-Care may be for you.<br /><br />Asset-Care eliminates this worry with its guuaranteed noncancellable continuation of benefits rider premiums - even for lifetime protection. Asset-Care is not traditional LTC insurance. It is actually a Whole Life Insurance Policy that accelterates the death benefit should you need long-term care. In addition, they offer a rider that will extend benefits for an additional number of months or even for life. As an added bonus, if you never need long-term care, then a beneficiary receives the death benefit.<br /><br />It is nice to have guarantees during uncertain times!Brent Lamon, RHU, CLTChttp://www.blogger.com/profile/14666087183945397363noreply@blogger.comtag:blogger.com,1999:blog-5041500208234989315.post-68681908787123565452011-02-24T07:10:00.001-08:002011-02-24T09:51:07.838-08:00The Need For Disability InsuranceIt boggles my mind how many people do not own disability insurance. They own life insurance, but DI never crosses their mind. Don't they know that they are about 7 times more likely to become disabled before reaching age 65 than they are to die? Probably not, and it is our fault. We don't tell them!<br /><br />Independent brokers and captive agents alike, always lead with life insurance. When I bought my home 5 years ago, even my P&C agent asked me if I had enough life insurance. Generally, when disability insurance is brought up, it is either an afterthought or something the client requests. I even had a broker call me one time and said that his client would not buy life insurance from him until he sold the man disability insurance. The broker was actually upset that he had to sell him DI first. Unreal!<br /><br />Income is the fuel of the financial engine. Nothing happens without it. No money for home and car payments, living expenses, or college savings; and certainly no money to give you for retirement plans or insurance premiums. How will their disability impact you? All of their financial plans crumble and you loose a client.<br /><br />Do you and your clients a favor and make covering their income in the event of disability a priority.Brent Lamon, RHU, CLTChttp://www.blogger.com/profile/14666087183945397363noreply@blogger.comtag:blogger.com,1999:blog-5041500208234989315.post-18936948156922599592011-02-11T10:45:00.000-08:002011-02-11T10:48:46.299-08:00LTC Insurance Pays Out in 2010The 10 leading U.S. long term care insureres paid more than $10.8 billion in daily claim benefits in 2010, according to a new AALTCI study.<br />This is an increase of 53% compared with the amount the same insurers paid in daily claim benefits in 2007.<br />The study used claims data for the approximately 5.76 million individuals covered by the insurance companies. About 31% of new individual claims are for home care, 30.5% are for assisted living and 38.5% are for skilled nursing care.Brent Lamon, RHU, CLTChttp://www.blogger.com/profile/14666087183945397363noreply@blogger.comtag:blogger.com,1999:blog-5041500208234989315.post-69280280659246395032010-12-29T12:24:00.000-08:002010-12-29T12:51:47.794-08:00Why Are LTC Carriers Exiting The Market?Over the past few months, we have witnessed a major reduction of players in the LTC market. It started with John Hancock pulling out of the multi-life and group market, a clear sign that they were looking to limit their exposure. This was followed shortly by MetLife's announcement that they were withdrawing from the market entirely. Why did two of the biggest players in the LTC market suddenly decide to jump ship?... They were facing the <em>perfect storm!</em><br /><br />Carriers that had been the LTC market since the beginning, used to be held in high regard. They were <em>experienced</em>, not some newcomer looking to ride the wave of awareness that has swept the nation. However, we have since learned that these trailblazers are getting hammered when it comes to claims.<br /><br />Due to the relative newness of long-term care insurance, very little actuarial data exists to help carriers price their products. As a result, they missed BADLY. Lapse rates are much lower than expected. More claims are being filed and they are lasting longer than ever anticipated. LTC carriers have been hemorrhaging money over the last few years on these older blocks of business.<br />Combine these pricing mistakes with the current economic environment and you have created the perfect storm. <br /><br />Will the long-term care insurance industry survive? Yes, but not in its present form. Over the next few years, LTC carriers will have to make hard choices when it comes to policy design and pricing. It has become evident, that the current model is not sustainable. What will the next generation of products look like? Who knows? We will have to wait for the clouds to clear.Brent Lamon, RHU, CLTChttp://www.blogger.com/profile/14666087183945397363noreply@blogger.com