No one, including me, wants to see higher premiums on long-term care insurance policies.  That being said the realities of the marketplace, economy and claims experience requires that insurance companies offer products that are viable for years to come.  Prudential has been indicating to us for some time that California rates and claims experience were becoming a big issue for them.  I’ve been telegraphing to you for months now that a LTC3 new business rate increase and product changes were imminent. Prudential long-term care has been one of our best selling products for the last 5 years. Now, thanks to the glacial workings of the California Department of Insurance, consumers here will have fewer long-term care planning choices.

If you have any Prudential LTC3 proposals pending with clients you need to act today.  Applications must be in our office by Monday, February 24, 2012 so that we have adequate time to process and overnight them to the home office prior to the February 29^th deadline.  Employer Sponsored Program (ESP) employer applications must also be in the home office by February 29^th.  You will have 60-days from the date of home office approval to submit these applications to the home office.

PLEASE CLICK HERE to download Prudential’s official announcement and read carefully.  Contact your BJFIM/Paradigm marketing representative for proposal refreshes and help.  Remember, Prudential LTC3 is very competitive and the 50% cash alternative benefit is the best in the industry. If you haven’t purchased a policy on yourself, Prudential offers a 5% affinity discount to agents and their spouses.

You’ve got 30-days to make the sale.  Please let us know how we can be of assistance to you.

CLICK HERE to register for our February 2, 2012 webcast featuring more information on this and other important sales opportunities.

barry@paradigmins.com

This apparent sudden turn of events comes as little surprise to those of us tracking this issue.  Conventional wisdom in Washington, DC has, in recent weeks, come to the realization that a program as ill-conceived as CLASS was a bridge too far despite the the powerful political forces in support and the obvious need for Americans to have expanded options for long-term care planning.

As CLASS’ demise has become more and more evident the question that has plagued me is this; since CLASS was an integral part of how the Obama Administration planned to pay for PPACA would it’s death mean that health care reform would have to be revisited?  Apparently not.  As the above referenced article states:

Technically, Health and Human Services Secretary Kathleen Sebelius has most of next year to make a decision. As long as CLASS remains on the books it counts as reducing the deficit in the ten-year estimating window used for federal budget purposes. That’s because CLASS would collect premiums for a number of years before it paid any benefits. The budget quirk may make it tempting to maintain at least a shell of a program.

So, the “Ponzi” scheme (not my words — Senator Kent Conrad, (D) North Dakota) known as the CLASS Act. will now become a doppleganger of sorts; “a ghostly double or counterpart” (Dictionary.com) of it’s former self.

Now it becomes vitally important for consumers to take charge of their own long-term care planning. There will be no government bailout and the creaky safety net of Medicaid (Medi-Cal) will continue to fray.  This means that the best hope for the public are insured private long-term care planning solutions sold by independent insurance agents and financial planning professioinals who will be able to help them with a growing number of traditional and linked LTCi products.

As we discussed in our web cast this morning, NO LONG-TERM CARE INSURANCE BROKERAGE GENERAL AGENCY is better positioned and more prepared to help you assist your clients in this vitally important arena.

Check out our website and contact us today.

Sincerely,

Barry J. Fisher

barry@paradigmins.com

Over the past few months I have spent a great deal of time exploring new products and companies that fit into our long-term care planning universe.  One of my discoveries is that life and LTCi carriers are beginning to embrace online application processes.  Since more agents are selling insurance over the phone, sometimes utilizing ”GoToMeeting”-type technology, it’s clear to me that brokers can do more with less and increase their profitability.

As we adapt our product offerings and take advantage of new opportunities, we know that many of our brokers may not specialize in the sale of life or long-term care insurance. Therefore our goal continues to be to make the independent producer’s life easier while helping them provide their clients with top quality products and services.  Our intent has never been to be a ”big-box” brokerage general agency; our goal, however, is to give you access to life and LTCi products that are easy to understand and good consumer values.  I believe that we have a real winner with Genworth Financial’s Life Quick Request (LQR).

LQR is an online application and policy fulfillment process. You can illustrate and apply for Genworth’s Colony Term UL 10, 15, 20 and 30 as well as their new LifeLong Term UL product series.  The Colony Term UL series is competitively priced against ordinary term life policies with one distinct advantage; since it is on a UL platform the insured can extend their policy during the term of the plan at their attained age, original underwriting classification and a contractual guaranteed rate.  LifeLong Term UL is for clients who need coverage for periods longer than 30 years. With this program you can dial-in a premium payment period up to age 120.  LifeLong Term UL is not built for cash value so the rates are extremely competitive.

But this isn’t just about competitive pricing. The online LQR process is simply awesome.  Several weeks ago I needed to purchase a life insurance policy on Susan.  I sat down at my kitchen counter and spent less than 15 minutes quoting out the options, choosing the plan and then answering a few questions.  Once completed I submitted the information electronically to Genworth and they took the process from there.

At that point the system allows you to print out or email  a short consumer brochure that clearly explains the process to the client.  Within minutes I received an email confirmation that the ticket had been received by Genworth.  Our case manager, Jolene Mitchell, also gets notified that a LQR ticket has been submitted so that she can track the process for the agent. Within hours Susan got a telephone call from Genworth to set-up a 30- 45 minute telephone interview where they complete the application and set-up whatever medical exams are required. Within a week the medical was done, the APS was ordered and we should get the underwriting decision shortly.

LQR also helps the agent field underwrite the risk.  With a simple click, you can open the Genworth underwriting guide have a good sense of the client’s probable rate class. You can also work with your BJFIM/Paradigm marketing representative who have access to the Genworth underwriting team.  Regardless, LQR reduces cycle times, improve case placements and reduces the number of APS’s that are required.  Just as easy as 1-2-3!

LQR is the first in a series of easy online selling tools that Genworth will be introducing over the coming months.  You will want you and your support staff to be in on the ground floor of this opportunity.  Join me for a web cast on Tuesday August 23rd at 10:00am when the Genworth LQR Team and I demonstrate this great sales tool.  CLICK HERE TO REGISTER!

barry@paradigmins.com

We dodged a scud missile last week. As my email and blog post regarding AB999 (Yamada) indicated, our Department of Insurance and a number of state legislators are working overtime to further hobble the California long-term care insurance marketplace.  Thanks to the efforts of industry and agent groups along with those who took the time to call and write selected State Senators, AB999 was “held-over” by the Senate Insurance Committee.  This is good news but AB999 is not dead. The fight will be rejoined in the second half of the legislative session (2012). AB999, as it currently stands, is rate stabilization on steroids. If passed in this form the law would cause great harm to consumers making traditional LTCi affordable only for the very wealthy or an endangered species.  We will keep an eye on AB999 and advise if “the beast” rears its ugly head again.

Affordability is a key issue when speaking to clients about long-term care insurance.  In today’s economic environment consumers are reluctant to make financial decisions that they may need to live with for decades. That being said new business long-term care insurance premiums are set to increase significantly as the handful of remaining companies either “refresh” rates or introduce new more expensive products.  5% compound inflation protection rates are expected to increase as much as 50% and other adjustments to key product components is likely.

And, while I know that you are probably tired of hearing about the “fire sale” that we’re currently in the midst of, here’s a question that may not have crossed your mind as it pertains to these pending product and pricing adjustments; what happens if a company cannot get their new rates or products approved in a timely manner by the California Department of Insurance?  They could withdraw (as John Hancock has) leaving consumers with even fewer choices.

Underwriting is also getting tougher in the world of traditional LTCi.  The required minimum of seven lives, for our only simplified issue multi-life option in California (Prudential), is increasing to ten lives in less than 30 days. It wasn’t so long ago that we had two companies offering simplified issue at three lives. How long Prudential remains in this market space is any one’s guess but it does seem that we have a shrinking opportunity to help business owners who may benefit from a simplified issue scenario, not to mention tax deductible premiums and tax-free benefits.

One more item I’d like to share with you before I get to my “tease” at the beginning of the post. In talking and listening to scores of agents and consumers over the past few months a consistent theme has emerged.  (1) People who purchased their long-term care insurance 5, 10 or 15 years ago are extraordinarily pleased that they have the coverage at a price that now pales compared to similar coverage today.  (2) Agents who have not spoken to their clients in the last few years about LTCi are stunned to see how much new business premiums have increased.  The take away here is that early adopters made the best choice from a cost-to-benefit perspective and that those who continue to put off this important risk management decision will pay either higher premiums or not be able to get coverage at all.

In closing let me remind you of a study that Genworth did last year of 1,000 policyholders who purchased LTCi through their independent distribution channel.  In only 13% of the cases was the sale initiated by an agent.  87% of the time consumers had to seek out an agent to sell them a policy. What conclusion do you draw from these survey results?  The words “under-served” certainly comes to my mind.  With this thought don’t let your clients be part of that 87%.  It’s up to you to discuss long-term care planning with your clients.  If you don’t, they will either purchase from someone else, or worse, not have the coverage they need in the future.

We have the tools and expertise to help you communicate with and educate your clients about the need for long-term care planning.  Call us today for more information.

barry@paradigmins.com

1. New business long-term care insurance premiums will sky-rocket making them unaffordable for the vast majority of consumers;
2. The few remaining traditional long-term care insurance companies currently doing business in California will leave the market;
   
3. Both of the above!

Time is short. The State Senate Insurance Committee hearing on AB999 is Wednesday, June 22nd.  If AB999 is not stopped NOW it will likely sail through the Senate onto Governor Brown’s desk. ACHLIC, ACLI, AHIP CAHU and NAIFA have come out in opposition to AB999.  CLICK HERE to read why this legislation is burdensome and what it will do to the long-term care insurance marketplace and California consumers.

You too can help.  I’ve posted a notice from John Hancock that lists the members of Senate Insurance Committee. Fax these state legislators.  Let them know that you do business in their districts and voice your support of our industry’s positions. Be nice, be respectful but be firm. I have called the aides to two key players (Correa and Lieu) and have left messages.

Over the years I’ve written articles and Blogs about the incidence and severity rate increases in long-term care insurance. I will be happy to continue this discussion in future posts.  That being said, AB999 is bad legislation. It is a a solution looking for a problem.  Please voice your opposition no later than tomorrow.

barry@paradigmins.com

• Age and/or stage in life
• Income/Assets/Premium paying ability
• Dominant risk management need
• Health conditions
• Pertinent insurance or risk management programs currently in place

Helping consumers plan for risks they face requires that you ask some basic “information” questions.  “Fact-finding” need not be an onerous or lengthy process.  It’s most central element is having a conversation with a consumer to determine their world view on what’s important to them. Their opinions will inform your recommendations.  That being said I can offer some general “rules-of-thumb” which you may find useful.

1. Anytime you present term or universal life insurance to a client they should consider a program with an accelerated benefit rider for chronic illness. American General Life & Accident Insurance Company Quality of Life ….^SM Insurance products include this at no additional cost.  Accelerated benefits can also be elected in the event of critical and terminal illness.  This opens a world of planning options for you and provides the policyholder with more choices if an untimely event occurs.
   • By the way, today is your last chance to register for our first AGLA training web broadcast on April 26^th.  CLICK HERE — or paste this URL https://www1.gotomeeting.com/register/594050065 into your browser for details and registration page.
2. Traditional long-term care insurance policies are exceedingly appropriate for consumers from their late 40′s through mid-60′s.  Business owners can take advantage of tax deductible premiums, tax-free benefits and simplified issue with as few as 7 employees.  Clients with the premium paying ability to solve multiple risk management issues with various products are well served by LTCi’s high benefit-to-cost relationship.
   • At the risk of belaboring a point, I’d like to reiterate that we are in fire sale mode with a number of our key long-term care insurance carriers.  We expect significant new business premium increases, particularly as it relates to 5% compound inflation protection, in the foreseeable future.
3. Single premium linked life product sales have been seen a marked increase over the past few years.  Typical of this sort of product are Genworth’s Total Living Coverage and Lincoln Financial’s MoneyGuard.  Consumers that consider these long-term care planning vehicles are generally older (60+), have considered traditional long-term care insurance and decided against it, and have invest-able assets close to $1,000,000.  Often they have set aside “safe money” in a CD as a hedge against a chronic or serious illness. This allows you to leverage those dollars in another safe vehicle that provides life and long-term care benefits.
4. A number of annual pay universal life insurance products now offer chronic illness ABR’s for relatively low cost. Our favorite is from Nationwide Insurance.  If a client is looking for a low cost UL with secondary guarantees why not provide them with the ability accelerate some or all of their death benefit in the event of a long-term care need?

There are other insurance products that include long-term care planning solutions; here’s a “sneak preview” of what you can expect in the coming months:

• Principal Financial’s non-can disability product, geared for the professional and white collar market, can include coverage for catastrophic disability, which is defined as the inability to perform two of six of the activities of daily living or suffering from a severe cognitive impairment.  This low-cost rider allows the insured to indemnify nearly 100% of their income should they suffer a catastrophic event.
• State Life offers a long-term care planning solution that allows clients to utilize money “locked-in” qualified accounts.  We have experts on staff that can guide you through this planning process. Contact me today for more details.

The world of long-term care planning solutions is expanding everyday. Consumers have choices and you have the opportunity do well by doing good things for them.  Contact us today at Barry J. Fisher/Paradigm Insurance Marketing.

barry@paradigmins.com

Let me start by providing you with a bit of background on American General Life and Accident Insurance Company.  ‘A’ Rated by A.M. Best Co, AGLA has been in business since 1900 and has more than 7 million in-force policyholders.  It’s origins date back to National Life of Tennessee (NLT) which was the original owner of the Grand Ole’ Opry.  In 1925 WSM (We Shield Millions) Radio of Nashville, also owned by the Opry, was among the first to advertise the need for life insurance over the airwaves.  Over the years NLT and a number of other insurance companies were merged into American General Corporation in 1968.  AGLA has more than 800 employees in Nashville and surrounding areas and services a wide range of insurance products.

AGLA’s Quality of Life ….^SM insurance products, while not a replacement for traditional LTCi, can provide policyholders of all ages added choices if they suffer a chronic, critical or terminal illness.  One does not have to die to qualify for these benefits and come at no additional cost to the insured. They are built-in benefits that allow the policyholder to accelerate some or all of the face amount and they can spend the money anyway they choose.

If a claim for accelerated benefits is filed, AGLA obtains medical records and other pertinent information in order to determine benefit qualification and the insureds likely life expectation.  This information is used to provide an offer of accelerated benefits based on the original request which can be as high as 95% (terminal illness).  The insured can then choose to take the offer or not. If they do, the death benefit and premium is reduced by the percentage of the death benefit accelerated.  In the case of universal life, cash value is also reduced proportionally.

Competitive rates make the AGLA products very attractive in their own right but this is not a spreadsheet sale.  You will want to spend time explaining the additional benefits of Quality of Life ….^SM Term and Universal life insurance products and work with clients to determine their needs.  The Consumer Choice Term (CCT) portfolio provides guaranteed rates and convertibility privileges. AGLA Choice Universal Life products have various features to meet client’s budgets and needs.  All include the ABR’s for chronic, critical and terminal illness.

And what’s in it for you the agent? Competitive compensation with a built in 20% commission bonus when you have exceeded $30,000 of paid annualized premium during a calendar year.  AGLA also has incentive programs and trips with qualification well in reach of most producers.  Paradigm offices will be offering broker, personal producing general agency and agency contracts.  Check with us to find out the requirements.

American General Life and Accident is a complete package for agents of all types.  Our first training web broadcast is on April 26 at 11:00am PDT. Register by CLICKING HERE, or paste this URL into your browser — https://www1.gotomeeting.com/register/594050065.  The focus of this training will be the basics, accelerated benefit riders and term life products.  We will have a follow-up web training session on universal life in May.

American General Life and Accident Quality of Life ….^SM Term and Universal life insurance is great opportunity for agents at all levels of expertise.  We look forward to you being part of this new opportunity.

barry@paradigmins.com

In many regards this is why I decided to accept Mike Flynn’s offer to head-up the agency’s long-term care insurance department in 1991.  I realized that if I was going to transition from personal production to marketing I needed to differentiate amongst my peers.  It seems to have been a good decision and despite the bumps and bruises along the way, next to marrying my wonderful wife Susan, it was the best danger/opportunity that I’ve taken in my 35 year career.

If you’ve been reading this BLOG over the past few months you know that I’ve been ruminating on the consolidation and changes in long-term care insurance and the pricing issues.  As I’ve stated time and time again, traditional LTCi, from top line carriers, has been and continues to be one of the best risk management decisions that an agent can propose and that a consumer can make.  That being said, we know that many agents are reticent to talk about the need for long-term care planning and insurance and fewer consumers find traditional products affordable.

Late last year I decided to accept a personal challenge. Find new ways that consumers can plan for the risks associated with chronic (LTC) illness.  The writing was on the wall.  The Pension Protection Act opened the door for new solutions but because many of them continued to be targeted at reasonably healthy and wealthy seniors with investable assets, it was clear that I needed to find something more for middle class Americans and the tools for you to make it happen.

As I mentioned in my email announcement to the field this morning, Paradigm Insurance Marketing (which includes Paul Kaplan and Jeff Tackett) is please to represent American General Life & Accident Insurance Company. AGLA has designed Quality of Life ….^SM Term and Universal life insurance products that help consumers cope with the risks associatied with long-term care, critical and terminal illness.  Now, you can make your client’s premium dollars multi-task and one insurance policy can provide meaningful living benefits and options; an opportunity so to speak!

There are many more aspects of AGLA that I want to share with you in the coming days but it is important that you register for our April 26th web broadcast (CLICK HERE). During this webinar you will get the complete picture of how you can fit into this exciting new marketing and sales opportunity.  I hope that you can join us.

barry@paradigmins.com

Context is important however, so let me review some of the key concepts that I’ve been developing over the past few months so that you will understand that we’re enhancing our product offerings and long-term care planning solutions and not throwing the baby out with the bath water.

1. The CLASS Act is a big opportunity for insurance agents. It allows you to open a discussion about long-term care planning.
2. For the vast majority of business owners in their late 40′s and early 50′s traditional LTCi provides tax deductible premiums and tax-free benefits.  Traditional long-term care insurance is provides the most “cluck for the buck” in most LTCi planning scenarios.
3. Multi-life long-term care programs for businesses with the requisite number of employees (7 in California and 3 in most other states) simplifies the underwriting process.  It’s an easy way to compete with CLASS!
4. New business rates on traditional long-term care insurance are going up.  Prudential has filed and we expect Genworth to do the same.  Even though California Department of Insurance is glacial when it comes to these sorts of rate adjustments when it happens you won’t have a whole lot of time to fall back and punt.  We’re in fire sale mode until further notice.
5. With this in mind, your clients are not getting any younger or healthier, rates are not going to go down in our lifetimes; now is the time to talk to all of your clients about the need for long-term care planning  and insurance.

We’ve also seen that traditional LTCi is sadly becoming a product for upper middle class and affluent consumers.  This means that the great middle class needs to make their premium dollars multi-task.Maybe this is not an optimal solution but the fact is that insurance liquidity of some sort when one suffers a chronic (LTC) illness or event is vital.  If someones life or disability insurance provides accelerated or additional benefits, if  long-term care is required, they will have more options to cope with the challenges they face.

Therefore, in the coming months, we will be introducing you to a whole new generation of long-term care planning solutions. These will include annual pay term and universal life insurance, single pay life products, non-can disability coverage, critical illness and annuities.  The one common theme is that all of these, like traditional LTCi, will provide benefits when the insured suffers from a chronic illness. Our intent is to turn you into a long-term care planning solutions machine.

Now for a sneak preview of our first coming attraction:

• ‘A’-rated recognized life insurance company
• Competitive term and universal life products
• All include chronic (LTC), critical and terminal illness accelerated benefit at no-up-front cost to the consumer
• Great commissions + 20% built-in agent commission bonus at $30,000 of paid annualized premium in a calendar year
• Brokerage, PPGA and agency opportunities

The BJFIM/Paradigm marketing team is currently integrating this new product into its long-term care planning solutions portfolio.  The countdown begins today for full release on April 18th.

We look forward to working with you.

barry@paradigmins.com

Insurance companies are also scratching their collective heads as to why consumers have not wholeheartedly embraced long-term care insurance, and even more importantly, why insurance and financial planning professionals are not selling more traditional long-term care insurance to more Americans.  Let’s think about this for a minute. In a normal product cycle, after introduction and sales to early adopters, most product prices go down relative to the benefit OR less costly alternatives enter the market to capture the next cohort of consumers.  Think of the progression of endowment life insurance policies to whole life; whole life to universal life; and all of the above to term life. Over time, life insurance became more affordable for more people as insurance companies evolved their products to reach more consumers.

Why hasn’t traditional long-term care insurance followed this well-worn pattern?  For as long as I’ve been involved with LTCi it has been viewed as a senior product (despite two decades of effort to dispel this notion).  Due to this perception, traditional long-term care insurance is subject to much scrutiny from Federal and state regulators: you see, SENIORS are a protected class, whether they know it or want to be.  Thus, the current regulatory environment pushes insurance companies into a very narrow framework of rich benefits, with premiums to match. This makes traditional LTCi a product most suitable for reasonably successful business owners who can deduct the premium, and for Americans whose incomes and assets fall beyond what is currently defined as middle class. This is why Partnership has had so little impact on market penetration.  The benefit of Medicaid asset protection for the purposes of spend-down (I use the term “benefit” loosely; I don’t believe being a Medicaid recipient should be coveted in any way, shape, or form) is secondary to the fact that the underlying traditional LTCi policy has become unaffordable to the population defined as the target market for Partnership Plans.

So, does this mean I’m giving up on traditional long-term care insurance?  HELL NO! For the right client, LTCi as we have successfully sold it for the past 20-years, is the most cost-effective way to indemnify the risk that we seek to cover.  If I haven’t yet proven that to you, I’m not exactly sure why you’re reading this BLOG.  However, if our goal is to cover more people for this risk and make more sales (both of which are my aspirations) then we need to step back and reconsider the tools we have to accomplish the mission. The mission being making sure that our clients have ready liquidity to pay for the costs of chronic illness. In essence, I’ve redefined the mission.  If middle class Americans struggle to afford the basics they certainly can’t afford traditional long-term care insurance as it is constituted today.  They need alternatives and they need us to help them find them.

The good news for you, and them, is that I’ve already got them!

Last week I shared the notion that premium dollars need to multi-task. We now offer a boatload of products that will do just that helping your clients get “more bang for their premium buck” and providing you with more opportunities to create sales that make difference.

Contact me or your BJFIM/Paradigm marketing representative for more on these great new products.

barry@paradigmins.com