WOW! 2009 is just about over. We’ve survived a year that started and now ends with great uncertainty. However, as we look forward to 2010 there are signs of life and we’re pleased to have a number of positive items to bring to your attention.
The Good News……..
While LIMRA reports year-over-year life and long-term care sales are down significantly, I’m pleased to say that, thanks to many of you, our LTCi production, particularly in the past six months, has been robust. Many of our agents continue to spread the gospel of long-term care planning and they are finding clients who wish to protect the assets and income they’ve been able to preserve. The need for long-term planning has not gone away. Informed consumers will continue to take advantage of the growing number of long-term care planning solutions. Smarter agents will educate themselves and stay abreast of changes and opportunities in long-term care planning.
CLASS-less In Washington, DC
I think it’s safe to say that Americans of most political persuasions are disgusted with the spectacle of Congress debating health care “reform” behind closed doors and taking votes in the middle of the night in the hope that we won’t notice. The soon-to-be passed Senate version includes the CLASS Act (another misnomer), an inspiration of late Senator Ted Kennedy, designed to provide basic long-term care benefits to those who cho0se to enroll. It is hard to say exactly what this plan will cover, when it will cover it, how benefits will be accessed, how underwriting (if any) will work and what it will cost; other than that it’s great! CLASS may not even make it into a final health care reform bill depending on the reconciliation process used between House and Senate versions of their respective bills. With this in mind, I’ll keep my powder dry as to what impact, if any, a government option for long-term care coverage will have on us. Frankly, I don’t think the Federal Government can compete with the private sector, nor do I believe the current purchaser of long-term care insurance will be impressed with the offering. Time will tell and I’ll keep you posted.
Pension Protection Act (PPA) & Long-Term Care Is Here!
The world of long-term care planning will become bigger and better in 2010 as provisions of PPA 2006 come into play. Beginning on January 1, 2010:
- Linked Benefit Annuity products with Qualified Long-Term Care Benefits
- Qualified long-term care benefits received for covered long-term care expenses are tax-free
- Internal long-term care rider charges are not taxed as distributions
- Linked Benefit Life Insurance products will improve
- Internal long-term care rider charges are not taxed as distributions
- Accelerated benefits for long-term care will be received tax-free
- Traditional long-term care funding opportunities expand
- New 1035 exchange rules provide tax-free options to fund traditional long-term care insurance policies.
- In theory, the owner of a cash value life insurance policy or non-qualified single premium deferred annuity can do a partial 1035 exchange to pay for a traditional LTCi policy. How quickly and effectively companies can put this mechanism in place remains to be seen.
- Payments sent from a single premium immediate annuity carrier to pay for a traditional LTCi policy are tax-free. Again, the inter-company ability to perform this transaction may not yet be widely available.
- New 1035 exchange rules provide tax-free options to fund traditional long-term care insurance policies.
Earlier in the year I wrote two articles for Broker World on the topic of linked products. CLICK HERE for the article pertaining to linked life insurance products and HERE the article on linked annuity products.
BJFIM/Paradigm is on the cutting edge of this new world of linked products and funding mechanisms. For those of you who attended our October meeting, you know that life and annuity products with linked long-term care benefits present expanding sales opportunities for you. We’re pleased to represent the following linked benefit companies in California (listed alphabetically):
Genworth
John Hancock
Lincoln Financial
Nationwide
State Life
Next year we plan to schedule monthly webinars with these various companies in order to assist you in identifying the right clients for these linked products, how to open new cases, how to position these products with and without traditional long-term care insurance and how to close the deal. Stay tuned for more information on these web meetings.
Spring Is Almost in the Air – Well Maybe Not Quite Yet
We are currently developing our concept for a broker meeting in early March. I hope to have a date for you shortly.
New BJFIM Website Coming Soon
We’re hoping to have a brand new Barry J. Fisher Insurance Marketing, Inc. website before the end of Q1 2010. The new website will be simplified and easier to navigate. It will also be more completely linked to our new Paradigm Insurance Marketing website which is already providing our agents with forms online and a whole host of life insurance tools. We devote many resources to our websites. We hope you find them useful and we’d appreciate your feedback on their usefulness for you.
2009 has been a challenging but good year. We appreciate your business and continued friendship. The staff and I wish you slightly belated Happy Chanukah as well as an upcoming Merry Christmas and Happy New Year. We look forward to working with you in 2010.
P.S. Our offices will be closed December 24th and 25th for Christmas and December 31st and January 1st for the New Year holidays.