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What Demographic Is Seeing An Upswing In LTCi Sales? The Answer May Surprise You.

Although people that are approaching retirement age are great candidates for Long-Term Care Insurance (LTCi), there is a rising trend in younger people purchasing a policy to protect their future.

According to the American Association for Long-Term Care Insurance, 26% of LTCi policies are sold to people age 45 to 54.

So what is prompting the younger generation to purchase something they may not use for 20 or 30 years?
 
Personal Experience
 
Many people who purchase LTCi policies understand the importance of having coverage because they are currently taking care of their aging parents while trying to raise their own families. These people know the benefits of LTCi and don’t want to put the burden of being a caregiver on their own children.
 
Cost of Premium
 
The premium for LTCi is based off the applicant’s age. This means that the younger they purchase a policy, the less they will pay. Although they may pay for a longer period of time, it is generally less expensive than waiting to buy.
 
Future Insurability
 
Younger buyers know that if their health were to change tomorrow they may not be able to purchase LTCi at any price. Buying the policy while young and in good health not only eliminates the concern about future insurability, it may cost less considering younger people have a better chance of qualifying for good health discounts.
 
The next time you are looking for prospects for LTCi, be sure to consider people in their 40s and 50s.
 
If you would like more information about prospecting for LTCi, contact your Long-Term Care Specialists today.
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Use the Exemption, But Don’t Lose the Store

I didn’t mean to burst a friend’s bubble when he proudly told me he had been asked to usher at a wedding but wouldn’t take part with the bridal party on the podium during the ceremony.  I suggested his role was equivalent to trying out for the neighborhood softball team and being assigned the role of scorekeeper.  I suppose I should have let him down with a bit more ease.

Kinder terms might have included sinecure, or minister-without-portfolio that describe a cushy job that has pay but requires little responsibility and has no authority.  We tend to look down on such positions as they are usually doled out as political or social favors simply because the recipient is owed a favor or knows someone in the back.

All that being said, a more important concern are your high-net-worth clients who would seriously consider giving away large amounts of property under the current high gift and estate tax lifetime exemptions, but don’t want to lose control over the assets.  It might be helpful to quickly review the ins-and-outs of the current exemptions at Time, Tide, and TAXES Wait for No One and High-Lifetime-Exemption Gifting – Playing It Safe! 

Two useful planning concepts that may put concern over loss-of-control to rest and result in significant tax savings are the Family Limited Liability Company (FLLC) and the lowly regarded sinecure!

A limited Liability company is simply a separate tax entity usually established to function as an active ongoing business.  It can be taxed as a C-Corp, an S-Corp, or a partnership.  A Family Limited Liability Company is a plain-ole LLC except all the owners (members) are related.  The FLLC can be used by a taxpayer to bundle assets under one roof where they are maintained and managed, even if not for traditional business purposes.

Consider how an FLLC can take advantage of the high exemption (assume $12,000,000 and a taxpayer with children) and still keep control without the gift being included in the taxable estate (all with the assistance and approval of legal and tax advisors, of course):
  1. The taxpayer chooses the $12,000,000 in assets to gift, creates an LLC, then contributes the assets to the LLC.
  2. The LLC is formed with two classes of ownership interest – assume 1% of the interest has voting rights, and the other 99% is non-voting interest.
  3. The taxpayer can now gift the 99% non-voting interest to heirs, usually to an irrevocable grantor trust for their benefit, without giving up any control or responsibility (sounds like a sinecure to me!).
  4. Even though the book value of the gift is $11,880,000 (99% of $12,000,000) the transfer is protected from tax by the exemption, but even better, the taxpayer still runs the show by retaining all the voting membership. The allocation between the membership classes does not have to be 1%-99%, rather whatever best suits the planning situation.
  5. Even better, advisors may suggest the book value can be reasonably discounted for gift tax purposes because of lack of control over and marketability of the FLLC interest. If so, even a 25% discount would allow for the transfer of non-voting membership with a book value of up to $16,000,000 that would still be protected by a $12,000,000 exemption.

It all reminds me of the time I auditioned for the church choir and ended up being made the music librarian.  Didn’t make the baritone section, but the vote was darn close!  Contact me about these or any planning issues with your CPS casework at 706-614-3796 or tom@cpsadvancedmarkets.com!

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How To Convert More Life Insurance Applications Into Paid Production

Surprises can be fun, but not when they’re thrown into the Life Underwriting process.
 
As producers, we all have experienced the challenge of making a recommendation, completing an application kit, and working through days, even weeks, of underwriting – only to learn that the client cannot qualify for preferred rates due to family history, or that they must pay a substandard premium because of multiple driving violations.

After all the work, how many of your applications actually end up being placed in-force?

Eliminate any unexpected surprises during underwriting.
 
We can provide you with tools that will aid in accurately assessing and qualifying your clients’ insurability.
 
Improve the percentage of applications that are converted into placed policies by performing a basic life needs analysis; asking the right field underwriting questions, and setting reasonable expectations with your client.
 
Qualify your impaired risk clients more accurately with one page fact finders we call Quick Quotes – with over 30 customized fact finders available online, there is a questionnaire available for almost any client profile.
 
Completed forms are analyzed by our dedicated Underwriting Department.
 
When appropriate, a member of the Underwriting Team will speak with you personally about your clients and provide directed questions about their health and medical history – the goal is to obtain tentative carrier offers before you make a carrier recommendation or take an application.
 
Completing a life insurance needs analysis and gaining an understanding of your clients desired premium outlay allows us to work backwards – maximize the insurance policy benefits while not going a penny over the client’s intended budget, even if they are adversely approved in underwriting.
 
Don’t assume all of your clients are healthy and will qualify at preferred best rates.
 
The reality is that less than 10% of all applicants qualify for the top tier rate class and the majority of clients are approved at standard rates. Take advantage of our services and expertise to avoid any underwriting surprises.
 
Contact us today to learn more about the resources available, and how you can improve your life application placement ratio.
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Get ‘Credit’ For The Work You Do

A carrier’s underwriting assessment involves the review of the overall medical history and the application of crediting tools to improve upon and provide the best underwriting class possible.
 
Here is a case study that demonstrates how credits can make a difference in the sale, by reducing the premiums:
  • 54-year-old female
  • Applying for $1 million of term life
  • Has type 2 diabetes; treated with Metformin
  • Build is 5’3”; 220 lbs.
Initial work up Table 4.
 
But with credits for:
  • Lifetime non-smoker
  • Income of $100,000
  • Preferred or better driving record
  • Negative cardiac testing
  • Controlled blood pressure
Final offer is Table 2!
 
Do what’s best for your clients with health history. Contact our Underwriting Department for assistance with your impaired risk cases.
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Home Is Where The Heart (And Sale) Is

When you approach clients about Long-Term Care Insurance (LTCi), be sure to ask where and how they would like to receive care should the need arise some day. Chances are, they’ll want to stay at home.

65% of long-term care is provided in the home – either in the home of the person receiving care or at a family member’s home.

Many people visualize long-term care as uprooting to a nursing facility – but plans allow for 100% of the benefits to be paid at home, allowing clients to stay with loved ones in an environment they’re used to.
 
Highlight the home care benefits that are automatically included in the coverage.
 
Doing so is a smart and effective way to show you are listening and are able to provide solutions that fit their needs.
 
If your clients are like most people, they find it hard to imagine moving out of the comfort of their own house for help with daily living activities like bathing, getting dressed, and eating. By emphasizing these at-home benefits, you’ll appeal to your clients’ desire to maintain their independence and quality of life, while increasing your potential for a successful sale.
 
We’re here to help you design a plan that is both affordable and the best solution for your clients’ needs – contact your LTCi Sales Reps for guidance.
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How To Turn Single Term Insurance Sales Into Three Commission Checks

Term Insurance is designed to provide coverage for only a specific duration of time (10, 15, 20, 30 years). However, almost every term policy sold through us includes a provision allowing clients to convert their term policy into a permanent insurance policy – without requiring any new medical underwriting.
 
One of our brokers shared how they use this provision to create additional sales while also providing clients with a solution that they can rely on for the rest of their lives. During the initial sales discussions, they promote this conversion privilege, working with the client to determine how much coverage they would need and how quickly they could afford to exercise this option.
 
Since the pricing for the permanent insurance is based on the client’s attained age at the time of conversion, the sooner that the client converts their coverage, the less expensive it will be.

The client does not need to convert their entire term policy at once and can make use of multiple partial conversions to help keep premium costs low while providing added flexibility.

For example, if the client decides to purchase a 10 term policy for a $1M face amount, they could potentially convert $500K next year, $250K more in 5 years, and then make a decision whether they want to convert and maintain the remaining $250K towards the end of the level term period.
 
Many of your clients do not know that their term coverage includes this feature.
 
Far too often, the discussion of how and when to exercise a term conversion option is a reactive one, taking place when the level term coverage is about to end or shortly after the client has experienced a change in health for the worse.
 
Don’t set your term sales on auto-pilot.
 
Talk to your clients about why it makes sense to take advantage of the conversion provision. Explain how they can keep their initial term policy rating for the rest of their life without having to re-qualify in the future. It’s another great reason to stay in contact with your client and could even create new sales and/or referral opportunities with their family and friends.
 
Oh, and did we mention that you collect a new commission for each conversion sale you make? Your Life Sales Rep is here to help – contact us today.
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Underwriting Outcomes That Will Make Your Heart Skip A Beat

Cardiac related impaired risk cases can get somewhat challenging in underwriting. There are many different types of heart conditions – from coronary artery disease to arrhythmias to congestive heart failure and everything in between.
 
With each of these conditions, there are many different factors the carriers consider when determining their underwriting decisions. We know just what to look for in these cases, and which carriers to seek out for the best possible outcomes.
 
Take for instance this recent cardiac success story:
  • 72 year old male, lifelong non-smoker
  • Applying for $3 million of permanent coverage
  • Has a history of two-vessel Coronary Artery Disease and an abnormal EKG finding of Right Bundle Branch Block (heart block)
  • Good compliance with recommended cardiac follow up and testing
We put our noses to the grindstone and worked the emporium to match the case to a carrier willing to offer a Standard rating!
 
It is a win-win when our Underwriting Team is involved with your cases, we leverage our experience to win it for your clients and for you. Get to the heart of the matter – we get the offers you need, to get your clients the insurance they need.
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LTC Detective Work – 6 Things You Need To Do

Long-Term Care can be a tough subject.

Often times, you have to do a little detective work to ensure your cases are processed through Underwriting quickly.

Here are six things you can do to help uncover important information the underwriter needs to issue your case.
 
Ask about specialty physicians.
  • If your client had bypass surgery, ask whether they have a cardiologist.
  • If they had joint replacement, ask if they have an orthopedist.
  • If they have rheumatoid arthritis, ask if they see an arheumatologist.
  • If your client is taking multiple medications for depression and anxiety, ask if they have a psychiatrist.
  • If they have diabetes, ask if he sees an endocrinologist.
Pay attention to the date of diagnosis.
A recent diagnosis (within six months to one year) may not be enough time to assess the client’s stability.
 
Note the date of the last doctor’s visit.
If it’s been over two years since your client’s last physical exam and lab work, they won’t qualify for preferred underwriting. Also, pay attention to recent doctor’s visits. Ask your client if they have a follow-up visit planned. Knowing an applicant is undergoing treatment allows the underwriter to order an attending physician’s statement immediately, instead of waiting until the client mentions it during the personal health interview.
 
Listen carefully for these things:
  • Pending tests – Be sure to ask if the client is scheduled for a test that has not yet been performed.
  • Recent surgeries – Ask what type of surgery the client had. Was a malignancy found? Has the wound healed? You also should ask if the client is released from care or requires further follow-up.
  • Physical therapy – Ask about the diagnosis. Is the pain or condition resolved? Do they require further treatment? Find out if the physical therapy helped or if surgery has been recommended.
Try to identify the diagnosis behind the medication.
Many people refer to a medication in terms of the symptoms it addresses. For example:
 
  • Your client says they take a “water pill for fluid.” This can mean several things, from occasional lower extremity edema to something more serious, like heart failure. Also, pay close attention to the medication dosage as this can be a clue to your client’s condition.
  • Many applicants will indicate they take a “blood thinner.” Ask about the diagnosis. Is there a history of stroke or mini-stroke? Has the client had any type of heart surgery and, if so, when? Has the client had blood clots? If so, how long ago? Has the client had surgery of the leg?
  • If your client says they take a medication for “bones” or to “prevent osteoporosis,” ask if they’ve had a bone density test done in the past two years and what the doctor told them about their bone density. Typically, these medications aren’t prescribed unless bone density tests have indicated the applicant has some type of bone loss, which impacts insurability.
  • If your client mentions taking a medication for “arthritis,” you should suspect rheumatoid arthritis or another serious condition and rate accordingly.
  • If your client lists pain medications, specifically narcotics, it’s very important to find out the reason the medication is used, how often it’s taken and how long the client has used it. For example, does your client use it only after they mow the lawn or do they have pain on a daily basis?
Question everything.
If you have a client who is young, but not working, ask why. Do they have chronic health conditions that prevent them from working? Are they collecting disability benefits? The underwriter needs to know.
 
Please contact your LTC Specialists for more information.
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Why Disability Income?

As discretionary income tightens in most households across the country, many Americans have put the purchase of retirement and insurance vehicles on the back burner, leaving themselves open to risk of severe loss and no way to indemnify.

While most would consider their greatest asset to be a house or a car, in reality a human’s most valuable asset is their ability to earn an income.

Without cash inflow, no insurance, investment, or savings product can be purchased and utilized. Disability Income is a commonly overlooked portion of the planning process yet can be the most important piece of the puzzle.
 
Common misconceptions about disabilities.
 
The main reason Disability Income is usually overlooked by Financial Professionals and their clients is the misconception of what causes a disability.
 
A recent consumer study released by the not-for-profit Council for Disability Awareness (CDA) reported that 71% of respondents said a disability is most likely caused by a serious accident.
 
In reality, insurance statistics show that only 9% of long-term disability claims result from serious accidents. The remaining 91% of income-interrupting disabilities come from common ailments like back and joint pain, chronic diseases, cancers, depression and pregnancy.
 
If your client becomes ill with any of the conditions or disabilities listed above and are unable to work for a period of time, will they have sufficient funds available to continue paying for their numerous financial obligations?
 
We can help.
 
We understand the challenges your clients may be faced with during periods of disability.
 
Our strong relationships with top Disability Providers allow us to help you find the best fit for your client regardless of their occupation.
 
Products range from simplified issue to fully underwritten with the goal of getting your client coverage as quickly as possible. Nearly all respondents in the CDA study rated their ability to earn an income as more valuable than any other resource in maintaining financial security. However, only 37% said they have thought about taking steps to protect their income. Don’t let your client fall into the remaining 63%, the need is real.
 
Contact your dedicated Disability Sales Specialist to learn more about how we can help your clients protect their most valuable asset.
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Stacking Estate Planning Concepts – Saving Heirs a Lot More!

By now all high-net-worth clients should be aware that their biggest death-tax savings opportunity – the lifetime exemption – is going to be cut in half on January 1, 2026.  But taking advantage of the high exemption by gifting property now is only the beginning of how much death taxes can be reduced.

A good rule of thumb:  your clients who will benefit are single taxpayers worth over $10,000,000 and married taxpayers worth more than $20,000,000.

Consider these very brief descriptions of accepted planning concepts that address the common questions HNW clients will ask, and that can be layered on top of the current use of the high exemptions.  They can result in a much smaller tax bill as well as allowing for ongoing property management and use even after gifting takes place.

How much can I save using the full exemption now?

A single taxpayer who uses the full higher exemption by gifting from an estate growing at 5%, might reduce the tax due in 20 years by over $6,000,000.  A married couple using both could save over $12,000,000.

What if my spouse and I don’t want to give away both exemption amounts?

Then use at least one full Again, assuming 5% growth, this could save over $6,000,000 in 20 years.

What if Congress decides not to reduce the exemption amount?

Transfer of assets can be treated as a Family Loan (usually to an irrevocable trust). If the exemptions are not reduced the loan can be called, and the property returned.  If exemptions are lowered then the loan can be forgiven just prior to 1/1/2026 and the property kept in the trust, treated as a gift.

What if I don’t want to lose control of the gifted assets?

Assets to be transferred can be organized under a Family Limited Liability Company (FLLC) with a small-percentage voting interest and a large non-voting interest. The non-voting interest, representing the bulk of the FLLC value, can be transferred while the taxpayer retains all voting interest.

Can a gifting spouse continue to benefit from the assets transferred?

Yes, property can be transferred to a Spousal Lifetime Access Trust (SLAT), an irrevocable trust in which the other spouse is a beneficiary for life. The beneficiary spouse can receive the income from the trust each year, as well as distributions for his or her health, education, maintenance, and support.  This gives the gifting spouse vicarious access (through the beneficiary spouse) to the transferred assets, if needed.  When the beneficiary spouse dies, nothing in the trust is included in his or her estate.

Can spouses set up two SLATs so that each can use their full exemption for the benefit of the other?

Yes, but special attention must be given to the drafting of the trusts by the legal and tax advisors involved, because certain restrictions apply, so as not to run afoul with the IRS.

If you think implementation of any or all of these concepts might help one of your HNW clients, I am available to talk more fully with you, and your client, and their advisors.  Let me know at 706-614-3796 or tom@cpsadvancedmarkets.com.

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