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!

• Eric Jacoby, CFP, is a financial planner who has made long-term care planning a must for his clients. For the past ten years Eric has consistently been one of our most productive brokers.  Eric has built his practice on networking with attorneys, CPAs and other financial planning professinals who value his expertise. No one gets away from Eric without hearing his sermon on the need for long-term care liquidity and how an unplanned for long-term care event can devestate even the most well conceived financial plan.
• Timothy Milaney,  CPCU, CLU, CIC, RHU, ChFC, CORS, PWCA, was our top producer in 2008.  His success is a result of one simple maxim; ask each and every client that if they have taken care of their long-term care planning.  If not, insist that they sit down and discuss it. Tim’s “One Responsible Source” business philosophy drives his desire to help his clients properly manage the financial risks they face.
• Mary Lou Reid, CFP & John Celantano are a financial planning tag-team who have been integrating long-term care insurance into their clients’ portfolios for more than twenty years.  John and Mary Lou have been industry leaders utilizing linked product solutions and have placed more than $25 million in asset based life and annuity long-term care combos.  Their insights will help you build the confidence you need to succeed in this fast growing segment of the long-term care insurance marketplace.
• Janet Madrigal, has come out of nowhere to become our fast-start wiz in 2010.  An insurance professional with varied and broad experience, Janet has made a serious committment to include long-term care insurance in each of her clients’ portfolios. We fully expect Janet to be in our top five for 2010.

What do all of these successful LTCi producers have in common?  They walk the walk and talk the talk!  They’ve included long-term care insurance into their day to day discussion of risk and financial planning and candidly, they don’t take “no” for an answer.  I’m also pleased to report that most use a number of the simplified sales tools that we’ve develped throughout the years to help make long-term care insurance simple to explain and understand.

And there’s an added bonus when you join us on March 11^th; during our Producer Panel, you’ll be able to partake in some great wines and enjoy gourmet chocolate from Tifa Chocolate in Agoura Hills.  Learning how to sell long-term care insurance doesn’t get much better than this!

CLICK HERE to read more about our Producer Panel and the rest of our top-flight presenters for our March 11^th meeting.

REGISTER TODAY and take advantage of our early bird pricing.  Space is filling quickly. You won’t want to miss this opportunity to get the competitive edge in all things long-term care insurance related.

barry@paradigmins.com

Underwriting Traditional & Combo LTCi — The Changing Game in Long-Term Care Risk Evaluation (course #238088) will provide you with insights into similarities and differences between traditional long-term care underwriting and the new combo products.  We know how difficult traditional long-term care insurance underwriting can be. The advent of life combo products adds the wrinkle of mortality to the morbidity piece that we’ve grown accustomed to.  Additionally, annuity combo products may provide us with a safe harbor of sorts for some of our most difficult underwriting challenges.  Understanding where each of the three products types works best can help you satisfy the client’s need for long-term care planning.  And there is no one better than Amy Chambers, Genworth Underwriting Manager, to be your coach in this arena.  This course is a must for any insurance and financial planning professional because it will make your life (as well as your clients’) a whole lot easier. 

Regardless of which product type you sell, the long-term care claims process is likely to come into play.  Long-Term Care Insurance Claims Practices — Where The Rubber Meets the Road in LTCi  (course #238087) is our second hour of continuing education on March 11th.  It is designed to give you clarity on claims adjudication so that you can confidently explain to prospects and clients what to expect.  The question of claims payment is one of the most often asked by agents and consumers alike and Renee Roberti-Klemenok, Genworth Claims Adjudicator will provide you with the tools and understanding necessary to sound like pro.

In addition to the two hours of classroom continuing education, attendees on March 11th will receive coupons for a big discount on two very important online continuing education classes from Lyte Speed Learning  (Provider #65579);  2004 California Long-Term Care 8-hour certification (course #146378) and Annuity Compliance 4-hrs (course #179938).  The discounted price of these online courses are $19.50 and $9.99 respectively.  This is a great value on courses that we all need to take every two years.  

Product, marketing, sales training, continuing education, networking, great food, wine and chocolate.  What more could you ask for in an agent’s insurance seminar?  REGISTER TODAY for this great event.  Space is limited and reservations are streaming in.  We look forward to seeing you on March 11th.

Where does this leave the typical consumer?  Ill served at best.  In the dark with an uncovered insurance risk at worst.  The smart planner will search out the information and broker that can help them but the simple truth remains that most don’t.  They either don’t understand or don’t know the problems that are headed their way. 

There is a confluence between my assertions above.  Many agents and most consumers are unaware of the expanding world of long-term care planning and insurance solutions that now exist.  Traditional long-term care insurance is no longer the only choice.  Brokers that focus on life insurance or annuities can now offer products with the advantage of long-term care coverage.  And traditional long-term care insurance agents may begin losing sales to their more nimble competition if they don’t move their game to a higher level.  The full implementation of the Pension Protection Act of 2006 means that financial and insurance professionals of all stripes are now playing in each other’s sandbox.  Either they will become fluent in how all of the various planning tools fit consumer’s needs or they will begin to lose sales, get sued by disgruntled clients and heirs or both.  Which category do you want to find yourself in?

It is because of this growth of new product types that we at BJFIM/Paradigm are changing our focus from long-term care “insurance” to long-term care “planning”.  Yes, we still make our living by helping you market and sell insurance products that indemnify against the long-term care risk.  But now the solution may include a life or annuity combo, traditional long-term care insurance or all three.  Sales will be won by those agents who can appropriately discuss the long-term care risk, help clients understand that planning for it makes sense and recommending the proper insurance solutions.

So does this mean that you’ll have to learn about new products and techniques that will help you assist your prospects and clients?  Afraid so. I’ve been at it for more than a year and our staff has as well.  And now that the provisions of the Pension Protection Act are fully in play insurance carriers are bringing new products online every month.  1035 Exchange opportunities will abound. Consumers will soon learn that they can use latent cash values in existing life or annuity products to provide themselves with life, retirement and long-term care security.  These folks will represent the low-hanging fruit for the agile agent. The question is, will you be the on the receiving or short end of the exchange process? 

As always our plan is to make it easy for you to succeed in all things involved in long-term care planning.  That’s why on March 11, 2010 we will be hosting a seminar that will help you become a master of this new world.  Join us for Links To Long-Term Care Planning Success, a day complete with product, marketing and sales ideas, continuing education credits and a whole lot more.  You won’t want to miss this opportunity to meet with our entire staff and our friends from Genworth Financial an industry leader in traditional and linked long-term care insurance products and planning.  

Take advantage of our early bird tuition and don’t forget, space is limited. Our meeting in October sold out so you want to reserve your seat today.  Click Here to get a complete program guide and register today!  We look forward to seeing you on March 11.

barry@paradigmins.com

The long-term care sales success “game” will be won by agents who are fluent in long-term care planning as well as those who can juggle multiple types of products. Traditional long-term care insurance agents will want to understand when and where linked products are appropriate.  Brokers who focus on life insurance will need to learn how an ABR for chronic illness can help their clients solve part or all of their long-term care need. Annuity specialists will want to consider how consumers with traditional annuity products may be able to take advantage of the new linked benefit offerings.  The opportunities in long-term care planning have just expanded exponentially; are you ready to multiply your sales? 

Join the Paradigm Insurance Marketing team and Genworth Financial on March 11, 2010 to discover the new universe of long-term care planning techniques and products. No insurance carrier and brokerage general agency are better positioned to help you capitalize on these new opportunities.  Here’s the short list of what you’ll learn:

       Life and long-term care insurance industry insights from Robert Eckhardt, Genworth Financial Senior V.P.                  

       Comprehensive product reviews for traditional and linked long-term care insurance as well as life and annuity products.

       One-hour continuing education session on traditional and linked long-term care insurance underwriting.

       One-hour continuing education session on the long-term care claims process.

       Top producer panel with a focus on opening new cases, presenting and positioning linked and traditional products and closing sales.

       Discounted online continuing education package from Lyte-Speed Learning

       Networking lunch + afternoon wine, cheese and gourmet chocolate tasting

       Discounts for 12-hours of online continuing education training from Lyte-Speed Learning

       Raffle prizes and much more

FOR A COMPLETE PROGRAM & REGISTRATION click on the link.  Take advantage of our early registration tuition.  Also, please note that space is absolutely limited at the Woodland Hills Country Club. I mention this because we had to turn some folks away for our October 2009 seminar and registrations for this event are coming in daily.

Susan, Paul and I thank you for your business and look forward to seeing you on March 11, 2010.

barry@paradigmins.com

Let’s take an affluent couple who are both age 65, in reasonably good health and who at some level believe that they can self-fund their LTCi risk.  You initially propose a $6,000 per month benefit, 5 year benefit plan, 90-calendar day elimination period, 5% compound inflation and waiver of premium.   In a survey of three top companies the average premium is about $9,000.  You carefully explain the benefits, current and future, and then unveil the premium to the prospects.  They glance at each other and say to you, ‘what if we never need this insurance’  If we live into our 80’s we will have given the insurance company close to $200,000 and our heirs will get nothing. This really doesn’t make sense to us.’

Now you may have anticipated this objection.  So you whip out your back-up proposal that illustrates the same plan with return of premium benefit.  This adds on average approximately $6,500 to the $9,000 premium you’ve already shown them.  Then you explain that most return of premium riders pay the estate (or in some cases a named beneficiary) a death benefit equal to the premiums minus any claims paid (point of fact, a few pay a death benefit equal to the premiums regardless of claims but this will be even more costly).

You’ve got ‘em where you want ‘em right’  Probably not!  Why’

A.      The premium you showed them in the first place was more than they want to spend and now you’ve increased the premium by 73%

B.      They still don’t think they’re going to use the policy.

C.      Even if they did believe that were going to use their policy they would like to see their heirs get all the premium back at some point.

I’m not saying that any of this is rational.  If they had been smart they would have purchased their long-term care insurance when they were younger, healthier and there were 10-pay option premiums that still made sense.  But they didn’t.  Now, you’ve got to get them to cross a bridge that is even further then you’d planned.  How about if you could show them an additional premium that is:

A.      Half the cost of the long-term care insurance based return of premium rider’

B.      Will return the entire premium regardless of claims.

C.      Allows them enhanced death benefit beneficiary options.

I’m suggesting that, instead of using a traditional LTCi ROP in a situation where the clients want the premiums to go to their heirs, you may want to look at a second-to-die life insurance policy as an alternative.

1.       A guaranteed death benefit $250,000 second-to-die policy on this couple would cost about $3,200 per year.

2.       You could propose a 10-pay plan for the life policy that would still cost clients less than the cost of the ROP (about $5,900 per year for 10-years).

3.       The death benefit is paid regardless of the claims paid from the long-term care insurance policies.

4.       A specific beneficiary can be named by the insured which is not always possible with an LTCi ROP that could cause a probate or estate tax issue for your clients.

5.       The clients can set-up an ILIT to hold the second-to-die policy which provides them with a ‘gifting’ opportunity, and will also shield the proceeds from probate and estate taxes.

6.       The death benefit is guaranteed and adds value to their legacy.

Offering a return of premium solution to your prospects may not make the sale.  It will however help you identify a real objection from a possible straw man. When the client sees the additional cost involved they could move forward with your suggestion, decide it isn’t worth the extra cost and purchase without any return of premium feature or move onto their next objection.  Regardless the second-to-die life insurance guaranteed return of premium option provides a lower cost alternative to traditional LTCi ROP with clear advantages.

BTW, the second-to-die life scenario works well for younger clients as well.

See how this idea works for the long-term care insurance prospects you’re currently working with.  Email me today with the details and we’ll get you the proposals that you need;barry@paradigmins.com.

Steve went out to see one of his existing clients.  He?s been talking to this gentleman about long-term care insurance for the several years and each time he has raised the topic the client says, ?I?m worth more than $5 million dollars, why do I need long-term care insurance?? Being the not so shy guy, Steve said the following; ?Do you have a $20 bill?? The client said yes, pulled his money clip out of his hip pocket, peeled-off a $20 and handed it over.  Steve then proceeded to tear the $20 bill in half and handed one of the pieces to his astonished onlooker.

Incredulously the client sputtered ?what are you doing?!  Steve then said ?was that painful? Now think how painful it will be when you have to write a check for $100,000 per year for your long-term care.?  Steve finally made this man feel the pain with a simple demonstration. His next line was classic.  He said to his client ?now let me show you how you can have a partner who will write the $100,000 check for less than ten cents on the dollar.?  The client said ?yes, get me a quote, and get it now?.

That was insight number one.  Revelation number two is that Steve is learning to say less and he?s enjoying it more.  He has come to overcome his need to explain every nook, nuance and nicety of the long-term care insurance products that he is talking to prospects about.  It isn?t easy for him, but he?s learned that less is more.  He?s selling the piece of money and more importantly the peace of mind that long-term care insurance provides consumers.

Most wealthy people got that way by leveraging their money.  It you can reach their pain and then show them, as Steve did, that they can get 100 cents for ten or less they?ll get it.  Don?t pre-suppose that they?re not interested because they can conceivably self-fund and keep after them.  They won?t consider buying until you knock them out of their comfort zone and they won?t do either unless you ask.

TIME IS RUNNING SHORT TO GUARANTEE YOUR SEAT AT OUR APRIL 29^TH

PRUDENTIAL LONG-TERM CARE INSURANCE SUMMIT

Two Hours Continuing Education

Sales Ideas & Technologies That Work

Breakfast & Validated Parking

Special Tuition For AHU Members
GO TO OUR WEBSITE FOR DETAILS & REGISTRATION

By the way, I forgot to ask Steve if he returned an in tact $20 bill to his client.  I’d wait until he takes the application!

barry@paradigmins.com

It doesn?t fit into my budget.

I have two kids in college.

My health/worker compensation/etc. insurance premiums just went up again.

Don?t talk to me about spending more money on insurance!

I?m worried about my adjustable rate mortgage.

I?m insurance poor. Talk to me next year (or not!).

So regardless of your expertise and ability to present the value proposition of long-term care insurance you hit the road block of ?I?m strapped for cash.?

One strategy you may want to employ is working within their existing insurance premium budget and finding ways for them to save on their current cost of coverage.  Several ideas come to mind but there are two in particular that seem to make a great deal of sense.

High Deductible Health Plans + Health Savings Account

Review of Exiting Disability Insurance Coverage

Today I would like to focus on the first of these two ideas. High deductible health plan + HSA are something I know about personally since Susan and I have participated in this program since the old days of Medical Savings Accounts. The metrics on this are pretty amazing for us. At our age (please, don?t? ask!) a $500 PPO health plan with one of the Blues would cost us about $1,200 per month.  Our high deductible plan runs $420 per month; a $9,360 annual savings. The individual deductible on this plan is $3,500 per person and the maximum family out-of-pocket is $8,000.

Because we have a high deductible health plan, in 2008, we will be allowed to fund our HSA to the tune of $5,800.  This is a pre-tax contribution which means it is written off above the line thus saving us our applicable tax bracket percentage; for example purposes let?s say 30%. My annual tax savings is $1,740 and my total savings between premiums and taxes is $11,000.  This will, under a worst case scenario cover our maximum annual exposure and allow me to save money for future health care costs within my HSA plan.

The money in my HSA plan grows tax deferred and we can use the money for any IRC ?213(d) medical expense including long-term care insurance premiums now or in the future, subject to the following IRS limits:

v      Age 40 or Younger $310  ($620 per couple)

v      Age 41 to 50 $580.00      ($1,160 per couple)

v      Age 51 to 60 $1,150.00   ($2,300 per couple)

v      Age 61 to 70 $3,080.00   ($6,160 per couple)

v      Age 71 +      $3,850.00   ($7,700 per couple)

These annual allowable amounts for long-term care insurance premium are adjusted upwards by about 5% annually.

Group Health Savings Accounts are beginning to come into their own as well. According to Cora Tellez, President of Sterling HSA, her group business in Northern California is booming because of the premium disparity that has developed between HMO rates and high deductible plan rates.  She expects this divergence to arrive in Southern California soon which means that group high deductible health plan + HSA may take hold here as well.  Incidentally, one of our top LTCi brokers in West Los Angeles tells me that when he has a company that is paying 100% employee and family costs high deductible plans + HSA are already his program of choice.

How does this tie in with long-term care insurance.  As you know we now have simplified issue long-term care insurance for as few as three employer paid lives.  Average premiums are running as low as $30 per month per employee.  Step one is to help your employer save money by installing a high deductible health plan.  The $30 per employee per month for key or all employees will seem like a pittance compared to the savings you have created.  Employees can then ?buy-up? on their employer provided LTCi using money that they are putting aside in their HSA.

Don?t forget, the benefits from tax qualified long-term care insurance are received tax free regardless of who or how premiums are paid.

We are pleased to be working locally with Morgan Anthony morgan.anthony@sterlinghsa.comof Sterling HSA.  She?s a real pro and can help you work through the specifics of any high deductible + HSA program.

barry@paradigmins.com

As I mentioned last week our new Loyal American long-term care insurance product will be released for sale on September 15^th.  One of the product’s strong suits is guaranteed issue at 25 employer-paid lives.  We have begun preparing proposals for our brokers and frankly we are amazed at how low-cost the premiums are particularly in relationship to other employee benefits that are commonly provided.  We’ve come to the conclusion that if you can sell group dental insurance and other ancillary employee benefits you can now certainly sell multi-life long-term care insurance; cost is no longer an issue.

One example, a small college, is interested in providing a core benefit buy-up plan for their 250 employees. The base plan illustrated provides $50/day for three years ($54,750 benefit pool), 90-day elimination period with a guaranteed purchase options (which allows the insured to increase the benefit by 15% every three years on a guaranteed issue basis); average cost per employee’  The price per employee; under $13 per month! A two year benefit plan (initial benefit pool of $36,500) but with an automatic 5% simple inflation rider would cost the employer about $23 per month per employee.  These premiums do not include a 25% discount if the employee’s spouse qualifies (on a modified issue basis) for coverage as well.

Let’s put these premiums and benefits into perspective.  What does a dental insurance plan cost an employer today’  $15 to $20 per month per employee’  Maybe more’  And after all of the deductibles, co-insurance and annual maximums how much does the plan really pay-out in benefits’  Additionally, can employees buy-up benefits if they want more’  No.  Can they keep the plan if they change employers or retire’  Maybe, maybe not. Regardless of the fact that this employer’s core long-term care insurance plan provides seemingly small initial benefits the fact remains that (1) the benefit in relationship to the cost is high and (2) the long-term care program is something the employee can keep and build on.  It gives you an opportunity to create a vested Multiple Stream of Income and a perpetual referred lead machine because the employer sponsored plan discounts are also available to family members!

You may be surprised to know that employer provided long-term care insurance has become the most frequently requested benefit by employees.  A core benefit buy-up plan provides employees with a start towards fulfilling their LTCi needs and it is a low cost benefit that employers can provide with confidence.

Contact your BJFIM/Paradigm marketing representative for details on all of our exciting multi-life programs where we can provide you with significant underwriting concessions on groups down to three lives!

Time is running short for you to register for our upcoming Multiple Streams of Income continuing education and sales seminars on September 25^th and 26^th.  Click on the link above for more details. REGISTER TODAY!

Tomorrow’s Blog:  Why Multi-Life long term care insurance is better than True Group.