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

While consumers are concerned about the future viability of the financial institutions they have come to rely upon they also recognize that they cannot exclusively count on their home equity and investment portfolios to pay for care when they need it and are willing to purchase some amount of protection for the peace of mind that it provides. Sell up not down. Getting some coverage in place today is the ticket. Stacking long-term care insurance policies of various benefit designs, purchased over time, will be the planning mode of the future. As the market evolves we will have new long-term care planning tools that include traditional policies and linked benefits to satisfy the consumer’s needs.

The most frequently asked question I’ve been fielding of late is regarding the financial viability of the long-term care insurance companies that we represent. My general and sincere response is it that I don’t know any more than the general public; thankfully I am not privy to insider information and my attitude towards the rumors that I hear, along with the rest of you, is general skepticism.  However, I have given some thought to the matter so let me share some of these with you:

1. We need to separate our concerns into two categories; (a) do the carriers have the ability to make good on their promise to pay claims on existing in-force policies and (b) will long-term care insurance continue to be a viable product line for the companies currently in the business?
2. In response to (a) above I think that one of the best gauges of a carrier’s ability to pay claims is their Risk Based Capital ratio.  If you follow the link you can get more detailed information but essentially this is a number, calculated by the NAIC, that measures an insurance company’s ability to support its business operations. Anything over 100 is good but the higher the number the better.  At last check, all of our long-term care insurance companies were in the 300 to 600 range. I’ll be updating our carrier rating chart sometime this week and if you’d to like to receive it, email me,barry@paradigmins.com or your BJFIM/Paradigm marketing representative.  My opinion, for what its worth, is that our current long-term care insurance companies, baring some unknown economic calamity, have the ability to pay their claims on in-force business.
3. (b) Above is a tougher question to answer. I don’t have a crystal ball or a hotline to anyone who can look into the minds of corporate executives or the future of how our current insurance carriers will position long-term care insurance in their portfolios. For most, LTCi is a small component of their overall operations. This can be good and bad. For a few, it is a large piece of their business which means that, in my mind, they are likely to stay the course. I do believe that regardless of the variables, long-term care insurance, in one form or another will continue to be an important product for a growing number of companies. These products will continue to evolve and will reflect the realities of the risk and the best way to manage it.  I can tell you this, however, today is the best time to purchase traditional long-term care insurance. It will never be a better buy and will never cost less.  Your clients and prospects need to hear this message loud and clear every time you speak with them.

The one long-term care insurance company that seems to be getting the most unfavorable press has been Genworth.  For those of you who would like to read a very detailed March 27, 2009 Genworth Investor Review, have at it.  I believe that it is generally positive as it pertains to Genworth but honestly most of the information, particularly without a narrative, goes beyond me.

Recently I returned from the annual Intercompany Long-Term Care Insurance meeting. I will share my observations of that in my next posting.

If you have any questions or comments please email me directly at, barry@paradigmins.com.

Here’s why.  Nearly 85% of all long-term care services are provided at home. Another 8% or so are provided in an assisted living setting.  This leaves only 7% utilization in a nursing home.  The employer sees $3,000 per month benefit but in reality they’ve only purchased $2,100 per month ($70 per day) for assisted living and $1,500 per month ($50 per day) for vast majority of care (85%) that the insured will want and need.  Now let’s say that the typical daily cost of care is currently $200 per day.  In reality, this insured will only be covering 25% of the cost of care at home.

However, as we know, it isn’t the cost of care today that’s at issue it is the cost of care when the insured actually needs it. Since long-term care costs are doubling at a 5% pace, if this insured needs care in 15 years, the group policy sold will pay for less than 10% of the actual cost of home care. The picture gets worse as time goes on.  Considering that the average age of issue for LTCi is age 57 this insured probably won’t need care for 25 to 30 years. What will this group long-term care insurance program be worth at that time?  BUBKAHS!

Yes, I know that key employees can buy-up on their daily benefit, purchase inflation protection and a longer benefit period. However, many don’t so all they really have is an illusion of long-term care insurance coverage.  Part of this has to do with the true group enrollment process; it is too easy since it requires no interaction between the agent and the consumer.  In my humble opinion the employer is wasting their money on an illusory benefit and the agent is not fulfilling their fiduciary obligation.

Now don’t get me wrong, I’m all in favor of employer paid core benefit programs and I have written about how you can provide significant benefits to a large number of employees for as little as $30 per month per employee. We’ve done that at our agency for our full-time employees.  My rule of thumb, however, is as follows:

• Always sell 100% home care.
• Always sell 100% RCFE (assisted living).
• Always sell some form of inflation protection even if it is a guaranteed purchase option.
• A two year benefit is OK; three years is better and not that much more costly.
• Work the buy-ups hard, particularly for your owners, key employees and their spouses

And most importantly use individual long-term care insurance products in a MULTI-LIFE program to overcome the vast majority of any underwriting issues that you may face.

I’ve written a number of different articles and Blogs as well as conducted webinars and seminars on why MULTI-LIFE long-term care insurance is generally better than true group.  I don’t wish to be redundant on this topic.  If you don’t want to go back and read why than just believe me, it is.  The simple fact remains that we can get significant underwriting concessions and (for want of a better term) JET ISSUE on employer groups with as few as three covered employees.  You also get real first year commissions and renewals are VESTED.

MULTI-LIFE long-term care insurance now accounts for 50% of our sales (2008) and I suspect that percentage will increase. Due to our success in this arena we have been able to provide long-term care insurance to business owners that otherwise would not have qualified for LTCi under any circumstances; ALL AT STANDARD RATES WITH 5% TO 10% EMPLOYER SPONSORED DISCOUNTS.

MULTI-LIFE is for any insurance producer who has business owners as clients. Most significantly, if you are a group benefits producer who is watching your income decrease as you work harder and harder to maintain your revenue base, MULTI-LIFE long-term care insurance is the key to sustained and increased income.  Oh and by the way, did I mention that your renewals are VESTED?

And if you are a long-term care insurance specialist you are missing the boat if you haven’t learned that individual sales are waning and multi-life sales are NOW. Have you thought about partnering with a benefits or property/casualty agent who is willing to do joint work with their business owner clients.   Ask us how!

We have three front-line carriers with amazing MULTI-LIFE long-term care insurance programs; Transamerica (15+ employees), Prudential (7+ employees) and MetLife (3+ employees).  We anticipate more carriers will be joining the hunt and you ought to be on board for the safari.

Call your BJFIM/Paradigm marketing representative today or email me atbarry@paradigmins.com.

Prior to Transamerica?s re-entry the products we focused on in the multi-life market space have been Prudential and MetLife.  Both provide significant underwriting concessions when as few as three employer paid employee lives come into play; please refer back to my April 3, 2008 Blog posting, or if you email me at barry@paradigmins.com, I?ll send you my July Broker World article which expands on the topic.

So why would we add another company to this niche?  Here is a short list of reasons:

1. Transamerica?s multi-life (group) market space is the 15+ size group because of its modified guaranteed underwriting program.
2. What we?ve learned is that as groups get larger underwriting simplification becomes even more critical; there is a greater chance that one or more employees can?t answer ?NO? to the simplified underwriting questions on the MetLife or Prudential employer group applications.  Transamerica?s MGI questions present a lower underwriting hurdle, however, we need 15 employee lives to get to this level of underwriting concession.
3. As groups become larger, a shorter application makes for an easier enrollment. Transamerica?s MGI application is the most streamlined individual LTCi application inCalifornia today.
4. With as few as 15 employee lives participating in the program Transamerica MGI takes underwriting simplification to a whole new level.  At our product roll-out webinars on Monday and Tuesday I will be describing the participation requirements, showing you the actual MGI questions and explain other program nuances. (Click Here To Register)
5. As groups get larger more challenges come into play such as, employer paid carve-outs with secondary voluntary offerings, multiple locations, enrolling spouses and family members and billing.  Transamerica offers a number of enrollment programs and tools to help you navigate these rocky shoals that our other insurance carriers do not.

If you are in the 15+ employer group market Transamerica presents an important alternative to you.  Until now, you have really only had one choice for small group long-term care insurance.  As I?ve written in previous Blogs and articles, in most cases, individual long-term care insurance is better for the employer, employee and you.  But you have gravitated to this small group carrier because it was easier to implement than individually underwritten long-term care insurance.  With Transamerica MGI, you now have an A+ alternative that is superior for all.

As you might expect, the Transamerica MGI program has issue limitations. However, I believe that you will find these program features to be consistent and competitive against the alternative.  Additionally, the flexibility available to us with Transamerica allows us to help you mix and match a variety of scenarios; executive carve-out, employer paid all core benefit plans, buy-up programs and voluntary plans.  And don?t forget, since the Transamerica program utilizes an individual product your first year commissions are far more generous than your A- alternative and renewals are 100% vested.  No one can steal your hard work by grabbing a broker of record letter.

I know that if you are interested in this long-term care insurance market segment you will want to join Susan and I on Monday or Tuesday for one of our Transamerica roll-out webinars. (Click Here To Register)

Next week w will also be announcing exciting news about our upcoming fall course schedule which will include the 8-hour LTC-2004 certification course, the California Partnership course and an incredible continuing education, sales and marketing training event on November 18^ththat will help crank up your marketing and sales plans for 2009.

Have a great weekend and we look forward to seeing you on the web Monday or Tuesday.

barry@paradigmins.com

The current Transamerica individual long-term care product offers a fairly simple menu of benefit options for your client?s consideration:

n       Home care, residential care, nursing facility

q      Comprehensive long-term care insurance

n       Preferred, Standard & Sub-Standard rate classes

n       Daily Benefit : $50 – $400

n       Facility Elimination Period: 0, 30, 60, 90, 180

q      0-day Home Care

n       Benefit Periods: 2, 3, 4, 5, 6, unlimited

n       30% Cash Alternative (included in base policy)

n       Inflation Riders

q      Deferred, 3% compound or 5% simple or compound inflation

n       Discounts:

q      Preferred discount 10%,

n       Non-smoker (3 years) & driving are the required

q      Couples discount 40%

n       40% if both apply in good faith and one is declined

n       Payment options:

q      Lifetime, 10-pay, PU-65 and One-Pay

n       Dial a rate guarantee

q      One to ten years

While we are currently in the process of identifying product ?sweet-spots? it is clear that one of Transamerica?s strong suits includes spousal rates.  The 40% couples discount along with the 10% preferred rate class makes this product hard to beat.  Also, for those of you still intent on offering unlimited benefit plans you may want to compare Transamerica?s lifetime rates to the seven and ten year benefits plans that have become one the new industry standards.

Has a prospect ever asked you about rate guarantees?  Transamerica allows you to dial in a rate guarantee period; anywhere from one to ten years; now this is absolutely one of kind in today?s market.

And no, your eyes are not deceiving you.  At least for the time being, we can currently offer Transamerica?s one-pay payment plan. Currently, no other insurance carrier in the Californiamarket has this premium payment option.  With year-end tax planning in sight, this may be something you want to discuss with some of your C-corporation business owners.  Please contact me directly if you have a case you wish to discuss, barry@paradigmins.com.

Transamerica is now in the process of putting the finishing touches on its individual proposal software.  We can get you rates however, so if you have hot prospects contact your BJFIM/Paradigm marketing representative for more details.

In the meantime, don?t forget to register for our introductory Transamerica product roll-out webinars on Monday and Tuesday of next week; Link to our website now to register.

Check out my Blog on Thursday to see how this great Transamerica individual product fits into the expanding world of multi-life (group), long-term care insurance.

We look forward to helping you with all of your long-term care insurance brokerage needs.

barry@paradigmins.com

Well, at last, a very patient guy from Texas, Ed Harris, CSA, CLTC, Genworth?s linked benefit product specialist, sat me down for about three hours to explain to me that I was missing the forest for the trees.  Ed started with a simple declarative statement, ?stop thinking like a long-term care insurance agent?.  ?You see?, Ed drawled, ?most people who purchase asset based long-term care insurance products have already said ?no?, at least once, to traditional products.  They are after another solution and if you want to make the sale you need to get your head out of the place it?s in.?

Ed has a singular perspective and a whole lot of experience in the linked product field. He was involved with the original development of MoneyGuard and then moved to Genworth where he helped create TLC.  He therefore has insights to product and consumer thinking that most of us have either overlooked or ignored; but more on Ed a bit later.

In my conversation with Ed I learned several rules that are now guiding us in seeing the market opportunities for asset based long-term care insurance solutions:

1.       Asset-Based LTCi Buyers Are Typically Older: The average age of issue for asset-based products is 67.  This differs from the typical purchaser of traditional LTCi by over a decade and, as the average age of issue for LTCi continues to drop, this disparity is likely to increase.

2.       Most Asset-Based LTCi Buyers Have Already Said ?NO? to Traditional LTCi: Well, the woods ought to be full of these folks right?  How many prospects have said to you that:

a.       Traditional long-term care insurance just doesn?t? make sense to them; or

b.       They think they can self-insure; or

c.       Since it isn?t going to happen to them they don?t want to spend the money on LTCi; or

d.       Who will get the money if I don?t use it?

e.       Or all of the above?

Based on the fact that traditional LTCi market penetration seems to be stuck at about 9% and the number of times agents have relayed these sad objections to me, between numbers 1 and 2 above, you should have a shopping basket full of prospects that fit this profile.

3.       Asset-Based LTCi Buyers Have At Least $1 Million In Investible Assets: This could be the     show stopper for many folks who adhere to the objections above. However, the fact is that in order for an asset-based solution to work the insured must be willing and able to reposition liquid assets to fund a MoneyGuard or TLC product. This is usually in the form of:

a.       A CD or emergency fund that they?ve set aside to pay for a long-term care event; or

b.       An under performing asset in their investment portfolio; or

c.       A liquid asset the client is willing to reposition because they see the need for some amount of long-term care leverage, but not traditional LTCi.

Of course, uncovering this money requires the agent to have knowledge of it, either through their ongoing planning activities with the client or through simple but skillful fact finding.  I plan to write about this in a future posting.

As you can see, an asset-based long-term care insurance solution isn?t for everyone and the best prospects for it may very well be people who you have already passed by. They?ve either said ?no? to traditional coverage or plan and hope to take care of the problem in a fashion more suited to their thinking.  Regardless, asset based clients are there, we just need to go find or rediscover them.

There?s one more issue that you might want to consider.  The asset-based or linked product market boom is nearly upon us.  Changes brought about by the Pension Protection Act are set to take place in 2010.  Carriers are scrambling to get ahead of each other with product offerings that will take advantage of the new tax favored status that life and annuity products with long-term care benefits will have bestowed upon them.  The need to become fluent in these programs and how they will interface with traditional LTCi products is fast approaching.

The good news is that Ed Harris has agreed to meet with 25 of our agents on June 25^th to help them learn the secrets of asset-based long-term care insurance sales success.  The requirement for attending the meeting is that you are appointed with BJFIM/Paradigm, have clients that fit the profile above and that you call me for details; (818) 444-7730.  Brokers will be given a ?seat at the table? on a first come first serve basis so don?t delay in getting in touch.

barry@paradigmins.com

As is required by various state laws, companies that introduce new long-term care products must offer those policies to existing insureds.  This has become a routine occurrence over the past few years and in most cases is a non-event since the new premiums associated with the upgrade do not justify a change. With that being said Prudential is now in the process of offering most individual LTCi contract holders a chance to upgrade to LTC3. We have been provided with a chart that describes the upgrades in some detail. If you would like one, please contact your BJFIM/Paradigm marketing representative or email me directly atbarry@paradigmins.com.

Now, back to the CNA issue —

For those of you who have spoken to me about this matter you have learned that I really don?t like class action law suits. I receive so many of these notices in the mail that I have developed a visceral reaction to them.  In the past I would complete the paperwork for my ?settlement?, only to discover that I would receive a check for 21 cents in the mail a year later.  It wasn?t even worth the bother! Someone was making out on these deals and it wasn?t me!

That being said I have reviewed the ?Legal Notice? that has been sent out, I have gone to the website that is provided, www.LTCclassaction.com, and I have had a brief conversation with CNA policyholder services (800-775-1541).  Please keep in mind, I?m not an attorney nor is it possible for me to know an insureds specific situation.  With this here?s what I can tell you that may be helpful:

• The letters that your policyholder receives may vary by policy form involved.  I have seen two versions.
• Option A, Enhanced Contingent Nonforfeiture Benefit, is the default choice.  It appears to be fairly benign and should not dramatically impact the policyholder beyond their current situation.  It merely provides them with a contractual ?out? if they don?t like future premium increases.
• Option B, Tax-Qualified Policy Replacement, may or may not be applicable as the policyholder may already have a TQ product.  That being said, for those who have NTQ LTCi this may be a great opportunity for several reason. According to someone I spoke to at CNA this morning, the new policy?s premium is based on the insured?s original age (as opposed to attained age)  I have asked for confirmation in writing.  This means that the policyholder?s premiums going forward may be lower and the benefit provisions may be better than what they currently have.
  • If you advise your client to make this choice you will need to work with them when they get their new TQ quote and help them analyze the pro?s and cons of taking this exchange option.  When they get this information from CNA, they will have a limited time frame to make a decision.  We can help you on this on a case by case basis.
• Options C, Reduced Paid-Up Benefit, is self-explanatory and in my opinion, should be avoided.

In the event that your clients chose Option B, you may need to brush-up on some of the issues pertaining to tax-qualified and non-tax qualified policies and their differences so that you can discuss them intelligently.  I have done some writing in the past on this topic and I will try to find it and update it if necessary. If you?ve taken my 8-hour LTC-2004 certification course in the last few years there is a section for your review. Concerns that the TQ policy forms would act as a bar to claims payment have not materialized.  Additionally, there are consumer protections and other enhancement that may be offered in the CNA TQ exchange policy that present a better value for your clients.

Please remember that all of us at BJFIM/Paradigm stand ready to assist you in helping your clients sort through this decision making process.  Again, please email me directly if you have any questions; barry@paradigmins.com.

DON?T FORGET TO REGISTER TODAY FOR OUR LONG-TERM CARE INSURANCE SUMMITON APRIL 29, 2008. SPACE IS LIMITED AND RESERVATIONS ARE COMING IN DAILY. THIS IS AN EVENT YOU WON?T WANT TO MISS.  GO TO THE BJFIM/PARADIGM WEBSITEFOR ALL OF THE PROGRAM DETAILS & SECURE ONLINE REGISTRATION.

If an American today retires at age 65, they have an eighteen year life expectation.  This means that fifty percent are likely to live beyond age 83.  In order to generate $1,000 of retirement income for 216 months (12 x 18 = 216) our 65-year old would need to have about $133,000 earning 6% after taxes.  In month 217 there would be no remaining principal so hopefully our retiree is lucky enough to be in the first half of 77 million Baby Boomers that run out of money the exact day they move onto the nether world. When Gen X & Y adults make it to retirement their life expectation is likely to be even longer.

Other surveys indicate that most Boomers don?t expect their lifestyle or spending to diminish when they retire.  So let?s say that our client decides that they can live on $5,000 per month when they reach age 65.  Carrying the previous example forward our retiree would need to have $665,000 chugging away at 6% after taxes just to keep them going until age 83. This plan again, would exhaust both principal and interest.

Ooops I forgot to mention one other nagging bit of information.  $5,000 tomorrow won?t be what it is worth today.  At a 3% rate iof nflation $5,000 will only be worth about $3,000 in 18 years (age 83).  So even if our 65 year old, who expects to maintain their lifestyle after retirement, earns 6% after taxes (twice the rate of inflation) and plans to run out the clock exactly on his/her 83^rd birthday they are still likely to live a number of years past their money.

So is this what Dennis Hopper is talking about in those commercials where he exhorts us to live life on our own terms?  This plan doesn?t leave a lot of room for error or living past your 83^rd birthday for that matter.

Need I ask the obvious question?  What happens to this financial plan in the case of an emergency?  Say the plumbing needs to be fixed or the family dog needs open heart surgery. Where will the money come from?  And since 30% of our future retirees mistakenly think they already have long-term care insurance (AARP) and the other 70% think they?ll never need long-term care (my statistic) then why bother protecting your nest egg?   After all, why worry about a $14,000 per month (5% inflation adjusted to age 83) long-term care event that won?t happen to me, particularly when I plan to die the day before all of my retirement money runs out?

If an insurance or financial planner thinks that their work is done when they place their client on a hypothetical trip towards retirement nirvana they are wrong!  They haven?t even done half the job.  Presuming that they can properly guide their clients through the ups and downs of investment savings and planning the wealth that they?ve helped them create is at mortal risk because if either spouse has a long-term care event (very likely) their monthly retirement income will be devoured.  Next goes investments that are throwing off income and finally the home, where everyone wishes to receive care, is at risk.  Then they (and their dog) can move in with their Gen X or Y children!  God forbid they should live past age 83!  For half of us that?s when the real fun begins!

Long-term care insurance is the NOW insurance product for the ME GENERATION!  Add an (L)to your client?s 401(k) plan and a LTC to their IRA to make sure that the engine of wealth they are building today is protected against the nearly inevitable long-term care event of tomorrow.

barry@paradigmins.com