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

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

As euphemisms go rate refresh can be tangy or pungent. Base rate premiums on 2 and 3 year benefit periods will decrease by 3% to 5% respectively. And rates with no inflation option and guaranteed purchase option (GPO) will remain unchanged. This change can be helpful in the multi-life market because it allows employers to purchase low-cost minimum benefit plans on employees so they can achieve the 7 lives they need/want for simplified issue. Prudential is our best multi-life play in California.  This is the tangy part but again “wait” should not be your word of the day.

I expect the BIG pricing HIT will be on the 5% simple and compound inflation options. If history is any judge, when other companies have repriced their 5% inflation riders we’ve seen increases of 20% to 50% depending on simple or compound as well as the applicant’s age. The younger the client the bigger the increase due to the fact the likelihood of claim is so far in the future. Also, since these are the benefits most sought after by business owners and professionals the opportunity to help your client NOW should be irresistible to both you and them.

This adjustment to the 5% inflation optons should surprise no one. The current economic climate, low interest rates and access to capital markets, has put enormous pressure on long-term care insurance companies and their ability to reserve for this future risk. Insurance carriers need to price responsibly in order to keep the promises that they’re making. Keep in mind they aren’t the Federal Government! We won’t be advised of the final new business rates until each state has held forth on Prudential’s rate action request but once approved the window of opportunity to score today’s lower rates will not be left open for long.

And in the category of “we need this like a poke in the eye with a sharp stick” the California Department of Insurance has introduced an Omnibus Long-Term Care Proposal, AB 999  (Yamada), which if enacted into law as is, will make it much harder for long-term care insurance companies to conduct business in California. While it is early in the game some think that AB 999 could cause irreparable damage to the what remains of the traditional long-term care insurance market in the Golden State.  At the very least products will get even more expensive and out of reach for the average consumer.

So my message to you should be quite clear; talk to your clients about long-term care planning each and every day. Suggest that they purchase something now with 5% compound inflation protection.  If they can’t take care of the entire need today a policy that covers part of the risk is better than nothing and it will act as a hedge against future pricing increases or product withdrawal from the marketplace.

Get all the latest on CLASS, product pricing and changes and how BJFIM/Paradigm can turn you into a long-term care planning and solutions machine.  Join us on March 21st for a webinar with all of the latest.  CLICK HERE to register.

barry@paradigmins.com

No, I’m not talking long-term care insurance today.  I referring to a stunningly under utilized insurance product (in America) that could be the answer to many of your clients’ personal risk management needs. 

In the course of your insurance career have you ever been unable to procure disability insurance or disability buy-out coverage for:

• New business owners who can’t provide adaquate income verification?
• Full-time or part-time stay at home parents?
• Folks who may be concerned about being able to make the mortgage payment due to a serious health issue?
• Professionals who have maxed-out on the amount of disability income coverage they can purchase?
• Business owners looking to create a business succession plan for an up and coming protege’?
• Self-employed business owners and consultants who work from home?

This is just a handful of missed sales opportunities because you may have hit a brick wall with traditional disability insurance offerings. 

Today, however, you can help clients with Critical Illness coverage.

CI is not new. It has been sold in Western Europe and South Africa for decades.  The primary reason for it’s success overseas are the huge gaps in the socialized medicine regimes of these countries. While we’re not quite there yet health insurance is limited to paying for medical care. It doesn’t pay the mortgage, keep the kids in private schools or put food on the table in the event that the insured has to take time off of work or career due to a serious diagnosed illness.  It also won’t pay for child care in the event that the primary stay-at-home parent is unable to be there when little Johnnie or Susie need to be picked-up at school and taken to their next activity.  Regardless of the specifics, in the absence of disability insurance,  life’s ongoing cost can cause extreme personal and family hardship. 

CI pays a lump sum CASH benefit in the event the insured is diagnosed with some number (it varies by company) of named diseases. The American General product that we’re proud to represent has 12 benefit triggers or qualifiers:

• Invasive Cancer
• Heart Attack
• Stroke
• Kidney (Renal) Failure
• Coma
• In Situ Cancer (25% up to a $25,000 max)
• Severe Burns
• Loss of Sight, Speech or Hearing
• Paralysis (50% for paraplegia and hemiplegia)
• Major Organ Transplant (25% payable when placed on UNOS listing)
• Coronary Artery Bypass (25% up to a $50,000 max)
• Loss of Independent Living

The Loss of Independent Living trigger looks much like the benefit qualifier for tax qualified long-term care insurance.  Couple this with the fact that AG offers a lifetime benefit that does not reduce and or disappear after age 65 and you’ve got a policy that can provide long-term protection throughout someones life expectancy.

There are other great reasons why clients who have already purchased disability income or health insurance from you may want to consider adding critical illness protection:

• Elimination period gap protection
• Coverage on most disability policies ends at age 65
• Home modification as a consequence of a serious disability
• Capital for investment/retirement plan completion
• Help with high deductible health plan expenses

CASH IS KING!  Especially when someone is sick.  How will your clients feel about you when you arrived with a check for $50,000, $100,000 or more when they’re worried about paying the bills, putting food on the table or taking care of their children?  How would they feel about you if you didn’t and found out later that you could have helped them with critical illness coverage?

Call your BJFIM/Paradigm marketing representative today.  CLICK HERE for our direct dial numbers and email addresses.

barry@paradigmins.com

BJFIM/Paradigm has added American General to it’s comprehensive list of traditional and linked long-term care insurace carriers. The new AG product is simple and easy to to explain to consumers. Here are a few of the highlights:

• Choose a lifetime maximum benefit (coverage) in easy to understand increments
  • $100,000, $250,000, $400,000, $500,000, $600,000, $750,000 or $1,000,000
• Select a monly maximum benefit amount from $2,000 to $12,000 in $1,000 increments
  • Some limitations do apply
• Calendar Day Elimination Periods
  • 30, 90, 180, 365
  • Optional 0-Day Elimiantion Period for Home & Community Care
• 40% Flexible Cash (included in base plan)
  • Insured can selelct cash alternative to reimbursement and pay for the services they choose on a monthly basis
  • Unused benefit remains in the lifetime benefit for future use
• Shared Care Benefit Rider
  • This is a one-of-a-kind true third pool of money.
• Inflation protection options allow for flexible product designs and affordability
  • 3% or 5% compound for life
  • 3% or 5% compound for life funded with graded premium increases
  • 3% or 5% compounded for life funded with graded premium increases to Age 65
    • The “third pool” shared care rider coupled with one of the 3% compound inflation options creates an extraordinarily compeititive benefit package
• AND THERE’S MORE!
  • Joint waiver of premium rider
  • Joint survivor benefit rider
  • Paid-up premium rider
  • Return of premium at death benefit rider
  • Restoration of benefit rider
  • Marital and preferred health discounts

NOW HERE’S THE KICKER (TEASE!)

American General accepts, Visa, MasterCard and American Express for premium payment.  This means that your clients can charge their premiums and receive airline miles or any other sort of “benefit” their credit card company offers them¹.  This is a great value added (for many reasons) to a terrific product.

American General has earned the following rating from the various services

• A — A.M. Best
• A+ — S & P
• A1 — Moody’s
• A- — Fitch
• C+ — Weiss
• 83 — Comdex

AG’s Surplus as a percentage of Assets is 17% and it Risk Based Capital Rating Ratio is 424.

Contact your BJFIM/Paradigm marketing representative TODAY.  We’re ready to provide product information and quotes for American General TODAY! 

We look forward to hearing from you.

barry@paradigmins.com

^{1 AGENTS BEWARE!  Do not use airline miles or other credit card “spiffs” as an inducement to purchase this product as it could be misconstured as an illegal rebate.  Use discretion when describing this product feature.}

Custom Care II, Custom Care II Partnership and Corporate Solutions (multi-life) applications must be dated on or before June 6, 2010, and must be received at the home office by June 21, 2010.  This means that applications must be received in the BJFIM/Paradigm Woodland Hills, California office no later than June 18, 2010 so that they can processed and FedEx’d to the home office to meet the deadline.  Lot’s of “must be’s”, but having been through our share of fire sales over the past 15 years we know how important it is to understand the rules set forth by the insurance company in order to get this business issued.  Rest assured that the BJFIM/Paradigm LTCi team will do everything it can to help you get those applications submitted in a timely manner.

John Hancock has a number of other product changes, suspensions and withdrawals in various different states.  For state-by-state rules and information contact your BJFIM/Paradigm Marketing Representative or CLICK HERE for JH’s May 3, 2010 product announcement.

So you may be wondering why this is happening and is there cause for concern.  In my opinion the short answer is “NO”.  Let me start with the situation in California.  The primary reason for the withdrawal is the glacial regulatory environment at the California Department of Insurance.  Custom Care II, the basic chassis for all products sold in California, has needed a new business repricing for several years now. John Hancock has filed the request, but as is typical, it languishes on some bureaucrat’s desk.  Long-term care insurance new product approvals and repricing is a low priority at CDI and the shortened work week now in place for state government employees has made matters even worse. 

In my opinion John Hancock has made a good business decision pertaining to its California business.  If the home office actuaries are not comfortable with a product’s pricing as it pertains to a host of global economic issues (which appears to be the case) the responsible thing to do is suspend sales.  This isn’t the “schmata” business; an insurance company cannot lose money on every sale and try to make it up in the volume.

On the national level John Hancock appears to be honing it’s product offering.  At this point I don’t see any red flags that would indicate wholesale abandonment of this market segment or risk. All major long-term care insurance companies have or will reprice compound inflation protection, move away from lifetime benefits and attempt to simplify their overall product lines. I may be wrong but as agents we should be supportive of an insurance carrier’s attempts to act responsibly in product pricing.  We’ve seen the results of the opposite strategy and they can be ugly.

That being said there’s a whole lot of opportunity in this news. Here’s a quick review:

1. The most obvious is to close out any existing John Hancock long-term care cases you have by the submission deadlines outlined above. If Custom Care II (particularly California Partnership) is the right choice for your client then there’s no time like the present to get it done.  Be assured that when JH comes back into California, the premiums on 5% compound inflation will be much higher and lifetime benefits will probably no longer be available.
2. Going forward we still have a number of great companies with mid-2000′s 5% compound inflation pricing; Prudential, Genworth, United of Omaha, Transamerica and Berkshire have not yet repriced.  I’ve said it before but I’ll say it again, your client/prospect will never see better premiums then NOW on 5% compound inflation protection.  How do you say going, going, gone!
3. If California Partnership is your client’s preference then after June 6, 2010 your one viable choice in the independent LTCi brokerage channel will be Genworth.  Additionally, Genworth is one of the few companies that continues to be bullish on lifetime benefits. After a rough 2009 Genworth is looking very strong.
4. MetLife’s new LifeStage Advantage offers a very simplied “piece of money” product chassis. While the 5% compound inflation rider has been repriced upward on both LifeStage and VIP 2, other inflation options coupled with multi-life at three lives make Met an important player in the multi-life market.

Regardless of these and future changes anticipating the long-term care risk is an essential part of responsible financial and insurance planning. For better or for worse traditional and linked LTCi products will continue to evolve but the problem remains the same. The solution is get your client’s needs covered with the best choice or choices that exist in today’s marketplace. 

BJFIM/Paradigm stands ready to help.  Call us today!

And now, John Hancock has a simplified issue/multi-life long-term care insurance program approved in Californiathat can provide you more opportunities to make LTCi an even bigger part of your 2010 profit picture.  You can get all the specifics regarding Corporate Solutions at our new BJFIM website.  That being said let me provide you with three highlights that make John Hancock’s Corporate Solutions distinctive: 

1. John Hancock’s Corporate Solutions requires seven (7) employer paid lives for simplified issue.  However, the minimum daily benefit allowed under the program is $50 per day (most other simplified issue multi-life plans require $100/day).  This means that an employer can make a very small premium contribution for employees in order to get the requisite seven lives for simplified issue. For example, a $50/day 2-year benefit plan for a 50-year old costs less than $11 per month (37 cents per day). 
2. Once you get seven employer paid employees into the program, spouses become eligible for simplified issue as well.  The employer must pay for a portion of the spouse’s premium but the spouse need not be actively at work. 
3. Until now all simplified issue multi-life programs issued policies at the standard (as opposed to preferred) rate class.  However, John Hancock offers a “preferred industry discount” of 15% for a specified list of employer groups including legal, accounting and medical offices. Click Here and go to slide 23 of the presentation for a complete listing of preferred industries. 

There are other great reasons why you should be considering John Hancock Corporate Solutions for simplified issue/multi-life long-term care insurance.  Contact your BJFIM/Paradigm marketing representative today for quotes and more information. 

barry@paradigmins.com

There are a number of different headlines wrapped up in these products that you might want to consider:

• The Pension Protection Act (PPA) of 2006, beginning in 2010, allows for tax-free withdrawals from annuities with qualified long-term care (QLTC) benefits. In other words, if a policyholder that has a QLTC single premium deferred annuity (SPDA) suffers a chronic illness, (unable to perform 2 of 6 activities of daily living or have a severe cognitive impairment), they can access a benefit from their annuity without paying income tax on their gain.
• The vast majority of in-force annuities don’t have qualified long-term care riders expect to see a mass movement (1035 Exchange) to them.  There are currently $875 billion dollars in SPDA money up for grabs; does anyone smell an opportunity here?
• Expect annuity products with qualified long-term care benefits to have simplified underwriting. The current State Life Annuity Care product has a fairly short list of “knock-out” questions, that if answered “NO”, means that the applicant can qualify for the basic annuity/QLTC coverage plus extension riders for more coverage.  There will be many variations on this theme.
• Life products, annual and single premium, with accelerated benefits for chronic illness will provide new opportunities for clients trying to have it all; life insurance for their heirs but also access to benefits in case they need care.

The client profile for linked products differs from that of traditional long-term care insurance. Generally older (late 60’s early 70’s), these folks have most likely looked at long-term care insurance before and didn’t buy for any number of reasons.  In many cases a life or annuity based long-term care solution may be a second chance to provide some leverage against the risk.  Suffice it to say buyers of asset based solutions will generally have a long-term care “nest egg” sitting quietly in an under performing investment (CD, money market account) as a “just in case I need care” fund. By repositioning this nest egg the client can create three to six times leverage for a long-term care event.  In the meantime their principal is safe and they maintain access to it.

One of the big challenges for agents will be helping clients choose which product is suitable for their specific needs.  All three, life, annuity and traditional long-term care, are three path’s to long-term care security. However, they are not mutually exclusive. Different solutions will appeal to clients at different life stages. You may find that your 30 something prospects will want an annual premium term or U.L product with a chronic illness ABR. When they reach their40’s and early 50’s they may purchase a traditional LTCi product.  In their 60’s and 70’s they may add to their coverage with an annuity or single premium life LTCi combo.

The big change will be that agents will not be able to hide in their narrow product specialties. Clients will expect you to be fluent in long-term care planning and the varied solutions available to them.  And you can expect us to help you with the full array of traditional and asset based products.  Register today for our April 30^th webinar on What’s Hot & What’s Not In Long-Term Care Insurance. We will be reviewing the current lay of the land and what you can expect in the months and years ahead.  We look forward to talking to you then.

barry@paradigmins.com