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news_6.2.22

How To Help Clients Through The LTCi Claims Process

More often than not, people don’t like to admit they need help with things they once did for themselves. This often happens with those requiring Long-Term Care, once they need assistance they rely on their family to provide for them.

What happens when the family care giver can no longer be of assistance? What happens when they get too burnt out or their abilities have been surpassed by the amount and type of care needed?

Once that final step has been taken and the caregiver realizes they need extra assistance, they usually file a claim.
 
Here’s how it works…
 
Assess Benefit Eligibility: This is the time when the insurance company checks to make sure the insured is eligible for care. Usually this is when a health practitioner determines the insured is chronically ill and needs help with at least two of the six activities of daily living for a period that is supposed to last at least 90 days or if the health care practitioner determines the insured needs constant supervision due to severe cognitive impairment
 
Submit Notification: If you feel your client meets the eligibility criteria you can notify the insured’s insurance company that a claim is being made. Notification should usually be made within 30 days of the onset of the need for care or as soon as reasonably possible. Notification can usually be made by mail or telephone and should include the insured’s name and policy number as shown on the policy schedule
 
Then what?
  • Once the notice of claim is received by the insurance company, a claim form is then sent to the insured. The form should be returned along with a provider’s bill to document the proof of loss.
  • Then the claim is evaluated to verify the insured meets eligibility requirements. Often an assessment is scheduled or the insured’s health care practitioner is contacted to verify medical records.
  • Once the claim is valid, a case manager will work with the insured’s family or caregivers to determine appropriate types of care.
  • After the policy’s elimination period has been satisfied, benefits will be paid to the insured or their care provider.
Although there is a good chance that the LTCi policies you sell today won’t have claims for years to come, it is also possible for an illness or injury requiring LTC services to strike one of your clients tomorrow.
 
It is best to be prepared and understand the claims process so you are fully prepared to help your clients put their LTCi policies into action.
 
For more information about LTC or the claims process, contact your LTC Specialists today.
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Critical Illness Insurance: Preparing To Bridge The Gap

Many Americans are living without ample savings – and a lot are living paycheck to paycheck. When these families are struck with an unexpected illness such as a heart attack, stroke, or cancer, it can cause a serious financial hardship… even if they have health insurance.
 
The average annual income in the United States is $50,000 – and most health insurance policies carry at least a $5,000 or $10,000 out of pocket max that will easily be reached when suffering from a critical illness.
 
On top of that, any one of these illnesses will undoubtedly result in an absence from work for an extended period of time – causing the loss of valuable income at a time when they are experiencing increased expenses.
 
Consider This
 
This combination of out-of-pocket healthcare costs, loss of income, and mounting household expenses come together to form ‘The Perfect Storm’, which too often leads to a bankruptcy.
 
Bankruptcies resulting from unpaid medical bills will affect nearly 2 million people this year-making health care the No. 1 cause of such filings, and outpacing bankruptcies due to credit-card bills or unpaid mortgages, according to new data.

Having health insurance doesn’t buffer consumers against financial hardship.

Most advisors sell life insurance to protect their clients should the bread winner not make it home from work one day. But how can we protect our clients against financial catastrophe if the heart attack, stroke, or serious illness doesn’t amount in a premature death?
 
Critical Illness Insurance pays a tax free lump sum payment on diagnosis of any one of a list of serious illnesses – including cancer, heart attacks, or stroke.
 
Claims statistics suggest we are five times more likely to suffer from one of these issues, than we are to die before we reach age 65. You don’t want to get a call one day, find out something has happened to a client, and regret having never discussed the opportunity to purchase a Disability Income or Critical Illness Plan with them – have the discussion with each of your clients as soon as possible.
 
Our dedicated DI Sales Reps are well versed on the features and benefits of Critical Illness Coverage – contact us at (949) 863-0700 Option 4 for assistance today.
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Making Heads Or Tails Of Executive Benefits

A simple coin toss is the most popular form of settling disputes or making decisions. Subterfuge is often used to improve a participant’s odds. If the caller sees through the “heads-I-win/tails-you-lose” ploy then the flipper can introduce a GMO known as a two-headed coin, usually a Washington quarter, available for a few bucks at any novelty store.
 
All this to illustrate that, for all the similarity of circumstances that the obverse and the reverse have on the dime, they can dictate significantly diverse patterns of events. We use the phrase two sides of the same coin to describe the different, but closely related features, of an idea or course of action. And so it is with certain non-qualified executive benefits.

All employers want economical ways to keep their key people. You make your coin by helping them decide which side of the opportunities available best meet their needs and goals.

An Executive Bonus plan (EB) is the most common selective benefit format in the business marketplace, and a Death-Benefit-Only Plan (DBO) is the most overlooked. Both have as their primary purpose to keep a key person with the company by providing life insurance protection.
 
Their primary difference is the amount of control the employer has – should the executive choose to leave. Both are easy to explain, implement and administer.
 
With an EB plan, simply put, the employer pays for the executive’s personal insurance coverage. In a DBO plan the employer promises to pay a benefit to a named beneficiary if the executive dies while employed, then buys a company-owned policy to fund against the contingency. In either case the vehicle can be a permanent or term product.
 
Often with a DBO the employer chooses to roll the policy out to the executive at the time of retirement. Even with term coverage the conversion privileges can make the transfer attractive if the executive has had health issues.
 
Consider the different sides of this coin:
 
 
Call to talk about executive benefits in particular and business planning issues in general that you should be discussing with every business client and prospect you have.
 
For what it’s worth – the simplest of all Super Bowl wagers made by bettors is on the outcome of the opening coin toss. Those who prefer the NFC did well around and after the turn of the century. The senior conference won the toss from 1999-2012 defying the odds (going in) of 16,384:1.
 
Tom Virkler, JD, Director of Advanced Markets
706-614-3796
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Is It Time To Upgrade Your Client’s Life Policy?

“Old Insurance” Vs. “New Insurance” – Which Do Your Clients Own?
 
While the death benefit is quite often the most important feature of life insurance, there are many products available that provide additional features and benefits.
 
The term “old insurance” applies to policies that don’t have much additional value beyond the death benefit, while “new insurance” would refer to life insurance where clients do not need to die in order to receive a benefit.
 
We advocate regular reviews of your clients’ insurance policies, to ensure they have the most appropriate and effective product solutions to meet their ever-changing needs.

A policy review may uncover that the existing amount of coverage is no longer reflective of their true need and/or that there’s opportunity to enhance their coverage via the inclusion of living benefits.

Take for example the following:
 
  • Long-Term Care, Chronic Illness and Critical Illness Riders are just a few examples of “new insurance” benefits not commonly available at the turn of the century.
  • The evolution of Index UL can provide your clients with tax-favored accumulation and tax-free income – which can serve as an alternative solution to the Roth IRA if they are restricted by contribution limits or earn too much income, making them ineligible for the Roth IRA altogether.
  • For younger clients concerned about retirement income, cash value life insurance makes for a great addition to their investment portfolio by providing a diversified source of accumulation.
Most clients only know about “old insurance,” and would likely consider a replacement if they were aware of the enhanced benefits available through “new insurance” products.
 
Don’t let your clients hear this story from another agent or advisor. We can provide you with turn-key policy review materials, and will help you to create a list of key talking points you can use to initiate discussions with your clients about their existing policies.
 
Contact your Life Sales Rep today for more information.
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Income Protection Could Never Be More Affordable Than Right Now!

When is the best time to buy an income protection plan? Could it be when my client is at the top of their earning years? Or when they are just starting their career?
 
The answer is, right now, before any health concerns arise that would preclude them from securing this valuable coverage. Before the premium is too expenses due to older ages.
 
Young couples (ages 30 to 50) are very important prospects for income protection. Start the conversation about income protection with young couples who have bought a home or are starting a family. This is the best time to build a foundation of financial protection.
 
Individuals in this age group still have a lifetime of earning potential. Income is their most important asset. Their lifestyle and long-term financial plans depend on the ability to work and earn a living.
 
Example: A 33 year old client earning $60,000 annually will earn $3,463,811 by age 67 with a 3% annual increases. Many would agree that this is an asset worth protecting.

An illness or injury that keeps your client from working can quickly impact other assets such as savings and retirement funds.

These resources could be depleted depending on the time needed for recovery and return to work. It could take years to rebuild these assets.
 
Who to Prospect:
  • Single, fulltime wage earners
  • New home owners or just started a family
  • Primary wage earners in families
  • Your current Life Insurance Clients
  • Auto policy owners with higher limits
Solution:
  • Talk to your clients about the value of their ability to earn an income. Explain what’s at risk. Potentially a lifetime of earning should they lost that ability due to illness or injury. (whatsmyeiq.org)
  • Show how disability income insurance can pay them an income while they recover to help pay expenses and protect their other assets.
  • Let your clients know that there is never a better time than now to purchase this coverage. The premium will never be lower and typically their health will never be better while they are still young.
We have a unique quoting tool (https://cpsinsurance.assurity.com/) and client approved marketing tools to help you prospect your current clients and reach new potential clients. Contact your Disability experts to learn more about growing this part of your business.
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Irrevocable Trusts: Pay The Trustee

A long time ago, in a galaxy far, far away I remember reading an IRS Private Letter Ruling that had about it the worst method an insured/grantor could use to pay premiums on a policy inside an irrevocable trust.
 
He was the sole owner of a business that each year cut a check directly to the carrier for the total amount due. The taxpayer was asking for a determination as to whether this quick-and-easy A-to-B transaction for maintaining a policy outside of his taxable estate would be deemed an incident-of-ownership resulting in the inclusion of the benefit in his taxable estate at death.

I’ve searched half-heartedly and unsuccessfully for the ruling. But if memory serves me well, which it well may not, the Service did some “deeming”, but not in the unfavorable direction of finding an incident-of-ownership anywhere in the works.

It treated the taxpayer’s monetary circumlocution as: first, deemed income to the taxpayer from the company that must be reported as income; second, a deemed gift from the taxpayer to the trust that must be reported as such; then third, a deemed premium payment by the trustee to the carrier – all without giving rise to any incident-of-ownership in the grantor/insured. Well, how about that?
 
It’s tempting to jump on such reasoning when it becomes bothersome to set up a trust checking account, or go through the multi-step process of actually gifting money to the trust and hoping that the godparent of the beneficiaries (who graciously offered to serve as trustee) doesn’t forget to pay premiums in the years following his or her retirement to the beach. But there are some serious concerns created by the convoluted route taken by the premium in the illusive PLR mentioned.
 
If avoiding gift taxation is dependent on use of available annual exclusions then two things are necessary to qualify for protection. The beneficiaries must receive notice of their right to withdraw contributions made on their behalf, usually accomplished through timely “Crummey letters”. More important, the trustee should be in a position to actually fulfill requests from beneficiaries should they choose to exercise their Crummey withdrawal privilege.
 
If the only asset in the trust is the policy and the cash for premiums that constitute the annual gift merely flies over the trust each year, the Service is in a strong position to argue that the present interest necessary to qualify for the exclusion is only an illusion.
 
In addition, a properly drafted irrevocable trust implemented to keep death benefits free of estate taxation will only allow and not require a trustee to purchase life insurance on the grantor’s life. This avoids any argument of grantor control over the policy. However, if each year, premiums are paid directly to the carrier the grantor has, in effect, forced the trustee to purchase coverage. So, how do you spell a-u-d-i-t?
 
Too often shortcuts are taken in the establishment of irrevocable trusts and too often insufficient attention is given to their ongoing administration. While it is not the legal responsibility of the insurance advisor to see that all is done according to Hoyle, it should be his or her annual practice to make sure that the proper parties are fulfilling theirs.
 
Contact our Advanced Markets Team with questions you have concerning your casework that involves trust planning or estate and gift tax concerns, at 706-614-3796 or tom@cpsadvancedmarkets.com.
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Are You Following Up on Your Term Sales?

Term Insurance is often sold to clients who simply want the lowest cost death benefit protection for a specified period of time. Clients and producers alike will preach the concept of buying Term and investing the savings.
 
While we’d like to think that clients and the investors hold themselves accountable for this strategy and do invest their cost savings, we know it is more likely that the clients pay for the Term coverage and then spend their savings elsewhere. The Term Insurance is then forgotten over time only to be revisited once the level Term period has expired and the client does not want to pay the escalated premium.

One way to help your clients effectively plan for their long-term needs is to discuss the Term Conversion option.

Consider this:
 
By completing a conversion application, the client can change their coverage from a Term plan to a Permanent policy without any additional underwriting. This is usually allowed up to a certain age (commonly 65, 70 or 75 depending on the provider). The cost of these conversions is based on the insured’s attained age at the time of the request so the longer your client waits to exercise their conversion option, the more expensive the premium will be.
 
This should be a topic that you address with your clients on a regular basis to ensure that you do not let the conversion privilege expire and also that you are converting at the earliest, most appropriate time which can save your clients significant premium costs. It will also ensure that your clients have the coverage in place when they need it most – when they pass away. Since the average life expectancy is in the mid-80s, more often than not, the level Term policy will expire before your client expires.
 
Ask yourself if you have a process in place to address your clients who have purchased Term Insurance. Even if converting their Term plan isn’t the most appropriate course of action at this time, the review discussion may uncover additional needs for insurance or lead to referrals.
 
We can help you determine if your client’s Term plan has a conversion option and provide you the marketing support needed to turn these cases into permanent sales.
 
If you have any clients that may be approaching their conversion deadlines or who may be appropriate prospects for a policy review, call us and we can help get the process started for you.
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Great Underwriting News On A Weighty Issue!

Our Underwriting Department can help you make the sale for your clients whose weight is an issue.

One of our A+ carriers takes an aggressive approach to underwriting build cases.

Some case examples that may surprise you:
 
  • A man who is 6’ 0” and 300 pounds could possibly qualify for Standard rates with credits for favorable blood pressure and cholesterol levels.
  • A woman can be 5’ 4” and 235 pounds and possible Standard if there are no co-morbidities present.
Next time you have an applicant whose weight is an issue, think of us and you’ll find we don’t think it’s that big of an issue.
 
Contact our Underwriting Team to help uncover more ways to get better offers for your clients and increase your sales !
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LTC Planning – What’s The States Got To Do With It?

In 1984 the Grammy Award for Best-Record-of-the-Year was given to a singer whose sobriquet within the industry was The Queen of Rock ‘n’ Roll.  It was Tina Turner’s first and only #1 Billboard hit and, at age 44, she became and remains the oldest female artist to ever achieve the honor.  Turner’s winning song, What’s Love Got to Do with It?, offers some sobering advice in its opening lyrics:

You must understand/ though the touch of your hand/ makes my pulse react/

That it’s only the thrill/ . . . You must try to ignore/ that it means more than that.

Lately it seems that all that talk about state-mandated long-term care programs is making a lot of pulses react.  But maybe, like Ms. Turner suggests, it shouldn’t amount to much and is not the important thing to which attention should be paid.

First, a few observations about what is going on in many statehouses across the fruited plain:
  • To date only Washington has enacted a government-provided long-term care. California has completed its LTC program feasibility report.  Fourteen more are giving serious consideration to their own LTC initiatives.
  • The trend suggests that the plans will be funded by a mandatory payroll tax. The one plan in force takes .58% of W-2 income with no cap.  The feasibility in the other may charge a progressive tax ranging from 1.5% to 2.5% on all earned income.
  • The Washington plan allowed a waiver period during which a taxpayer could initiate his or her own private coverage under a qualifying plan and avoid the tax levy. There is no certainty that any future legislation in any state will provide waivers for those with either existing coverage or policies purchased in anticipation state plan implementation.
So, what’s the bottom line regarding what we should be telling clients concerning all these state rumblings?  Simply this, to modify Tina Turner a bit:  What’s the state’s got to do with it? 
  • Motivation to consider private long-term coverage shouldn’t be to achieve a possible waiver and avoid the risk of a mandated levy against salary if a state plan is implemented.
  • Concern should, as always, be about the greater risk of a possible long-term care event that 1) becomes more likely and 2) more expensive to insure against with increased age.
  • At best state plans, like Washington’s, would most likely serve primarily as revenue-raising devices to shore up rapidly shrinking funding bases for current Medicaid plans. Any benefits they provide would, again, most likely prove inadequate for the level of care most clients would prefer.

It’s good that the activity of states is causing many to re-focus on the too-often overlooked need for long-term care protection.  Our job is to use this window-of-opportunity to demonstrate how a client’s future can be made truly more secure with the various forms and features of coverage available in the current marketplace. 

Contact us to discuss more!

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Are You Including Disability Coverage In Your Client’s Buy-Sell Planning?

When most producers and their clients think about Buy-Sell Planning for their business, they consider Life Insurance as the only vehicle needed in order to provide a source of funding for the buy-out of an owner.
 
It’s true that Life Insurance will provide for sufficient funding of a business continuation plan if the insured owner dies while the policy is in-force, but what happens if the partner doesn’t pass away and instead, they become injured or sick to the point where they are no longer capable of working in their normal capacity?
 
If you have used Disability Buy-Sell Insurance coverage as a companion to Life Insurance planning then your clients will be prepared for exactly this situation.
 
Including a Disability Income Policy in a Buy-Sell Arrangement Can Serve Two Main Purposes
 
It provides a source of funds to their business for the purchase of a disabled owner’s interest in a business while also providing compensation to a disabled owner for his or her equity in the business.
 
We can provide you with fact finders, valuation questionnaires and approach letters to help you to either review an existing Buy-Sell arrangement or to help you plan for the implementation of a new business continuation plan.
 
Once you have discussed and assessed the company’s need for including DI inside of their Buy-Sell arrangement, you can use it as a spring board to then promote Key Person Disability coverage, as well as personal DI coverage for any employees.
 
Success Story
 
Recently, we were contacted by a producer looking to secure a basic Term Life policy on a business owner. In discussing the need for the coverage, we brought up the concept of including Disability Income inside of the Business Continuation Plan.
 
The result was an individual DI policy for the owner and we are now working on providing plans for all of the Key Executives. Prior to this case, the producer had never sold a DI policy with us.
 
Getting Started
 
If you have written Buy-Sell Insurance Policies in the past but did not include any Disability Income Protection, it is never too late to reach out to your clients and offer them a complimentary policy review to ensure that the planning is still sufficient for their business.
 
While reviewing the Life Insurance inside of the plan, you can discuss the need to have DI policies including in the Continuation Planning.
 
Helping to protect your client’s business interests in the event of an untimely injury, sickness or death will further solidify your role as their primary insurance professional and will likely lead to additional sales opportunities within the business and referrals for new client opportunities elsewhere.
 
Call us today for help in starting the review process or for ways to enter the business insurance marketplace.

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