DHill Financial

Trusted Insurance Adviser since 1990

Category: Life Insurance

Is Long Term Care Insurance the missing ingredient?

It was 7:28am on January 2nd (2018) when the email arrived from a client; the message read “I’ll call you at 9:00am, we need to get our long term care insurance application submitted.

The demand for long term health care funding continues to grow with the recognition that as we age the risk of needing care continues to rise; so why the drop in LTC insurance sales in recent years?

There are a number of factors, but the greatest is that many people don’t see the LTC risk until they either have a personal experience or an adviser brings it to their attention.

Many consumers consider LTC planning as part of their long term financial plan,  so they rely on their financial planner to address important areas of risk management within their plan.  According to an AARP report, 70% of people over 65 require some form of long term health care.  This is much higher than the likelihood of double digit inflation!

You likely have a fantastic adviser,  and if they are an Accredited Investment Fiduciary, this likely does not apply, and what I’m about to share doesn’t include any financial planner I know (and I know a lot).

If your financial planner suggests long term care insurance isn’t right for you, this could be what they really mean:

  1. “I want to invest your money.” Raise your hand if you think that makes sense.  Of course it does.  If your advisers product/service is investment advice and management, then he/she often wants to manage assets. However, unforeseen health care expenses can jeopardize any well intentioned investment plan.  To maintain assets for continued growth, a more balanced approach that includes long term care insurance would ensure long term goals are achieved.
  2. “I don’t understand why long term care insurance rates are higher today.” Long Term Care Insurance plans have been around for 50 years… but not over 100 years like life insurance and other product lines.  Insurance companies could not predict how long people would keep their policies, as well as a decade of falling interest rates. Consumers who purchase long term care insurance tend to keep it.  Generous provisions in older policies coupled with reduced investment earnings, rates had to rise. Current plans are built and priced based upon claim history, current data, better knowledge and a tougher economic environment.
  3. “I want to sell you a life insurance policy instead.” This occurs in two very different, yet subtle ways. There are traditional financial advisers who felt that permanent life insurance was a poor investment choice and long term care insurance was a good idea, only to now suggest that buying whole life insurance or universal life with a long term care benefit is a good option. The second is the financial adviser who works for a life insurance company, I’m not sure I need to finish that thought for you to see where that is heading.  If you believe you’re going to need care at some point in your future, what would you do?  You’d want a long term care insurance plan supporting your lifestyle decisions and protecting your assets… not spending down the assets.
  4. “I don’t think you will need care.” As mentioned above it is most likely that you will need care at some point in your life. If you need care, long term care insurance is the most economical way to pay for it.  The policy offers the most liquidity compared to most other investments in your portfolio. Advisers use the common misconceptions for not having their clients purchase long term care insurance – I’ll never need it.  It’s too expensive.  My family will take care of me. Marketing research from LIMRA has shown that I’ll never need it is not the main reason people are unwilling to purchase long term care insurance; it’s not knowing what to do.
  5. “While Long Term Care Insurance is expensive, you should spend more to cover multiple needs.” Life Insurance plans offer a predictable (and often guaranteed) outcome, and this comes with a cost. That cost may be in the form of benefits (inflation growth, longer care needs, spousal provisions), or in the form of the higher premium required to secure the coverage. When added to a life insurance plan, the long term care feature is often a fraction of the cost of purchasing the same amount of traditional long term care insurance. The reason is that the life insurance plan knows it will pay out at some point, and has priced mortality and morbidity (awesome industry terms) together. So, while life insurance with a long term care can address the “what if you never need it,” this will not address the concern that this risk transfer vehicle requires a larger upfront financial outlay. (aka “it’s too expensive”)
  6. “I am not certified to offer long term care insurance.” In many states, to offer long term care insurance, licensed insurance agents are required to complete specific continuing education which outlines state partnership long term care programs.  Financial planners and insurance agents who do not suggest long term care insurance may in fact not be certified by the state to provide this coverage.  Furthermore, purchase of LTCi today looks very different than it did five or ten years ago; staying current on the latest trends impacting the long term care marketplace gives consumers better information from which to base their planning decisions.

There is clearly a lot of noise in the marketplace, and new product innovation continues to cloud the issue.  The focus needs to return to making sure our core needs are met as we age.

If you have questions keeping you up at night with regard to things you’ve heard about long term care planning, talk with an experienced LTC specialist to get a different perspective.  You deserve a better night’s rest.

Why your top Sales Executives deserve a raise

DHill Financial, Sales Executive, Insurance, Key Man, Trust, Split DollarLike any business that continues to succeed and flourish, it starts with a great idea, but that great idea goes nowhere without the ability to sell the idea to others.

Businesses recognize the key role their top sales professionals play in the overall success of the company, and elite sales professionals are often among the highest compensated employees at a company.

But is that enough, and even more important, how can you protect those assets?

Here are three questions to ask yourself to determine if changes are in order:

1. What is the Sales Executives worth to the company?

Taking the emotion out of the answer; if you were to transfer the risk of losing the sales professional to an insurance company, how much insurance would the company be willing to offer?

Do you know how much protection a company would be willing to provide in the event of a disability which took a sales executive out of production or an unexpected death?  Having properly assessed the economic value to the business will allow an organization to continue to succeed and flourish even during unpredictable events.

Key-Man protection can replace these economic losses to the business.  Insurance companies will typically offer up to 10 times salary for Key-Man protection. Take the sales professional who brings in $20 million of business to a company and is earning $300,000 a year; the employer may be limited to a key man policy that replaces $3 million (or 15%) of that revenue should something happen to the sales professional.

2. Does the Sales Executive feel valued and appreciated?

Many top sales professionals have lucrative sales incentive plans to help drive the type of sales behavior desired by upper management. Many of the same traits which make sales people successful in business also make them tougher to manage as employees; focus, drive, ego all play some role.

Employees like to feel valued, and especially those employees who use ego effectively to help reinforce the drive to succeed.  What message does it send to your top sales professional when you identify they are an important enough asset of the company to warrant additional attention… and protection?

Adding key man protection on the life of the Sales Executive in the event of a disability or a death sends a message that they are a key part of the success of the organization.  While firms work to avoid over-dependence, they also run the risk of not demonstrating how much the Sales Executive means to the company.

BEWARE, if you decide to buy Key Man on your top people, but not for your top people, that also sends a message.

3. Does the incentive package entice the Sales Executive to stay with the firm?

With fluctuating income, Sales Executives often find it hard to budget, plan, and execute sound financial plans. Employers can protect the value of their business, show the Sales Executive they are valued, and create an incentive plan to keep them happy through a split-dollar life insurance arrangement.

An employer can purchase a cash value life insurance policy for the sales executive where the employer retains some interest for Key Man purposes, helps the Sales Executive to defer some of their income, and provides them an incentive to stay with the firm.  Plans can be tailored around reaching Key Performance Indicators with a goal to have the Sales Executive reach a milestone to own the policy outright.

Contributions made by the employer to the plan on behalf of the Sales Executive are typically tax deductible making this an attractive tool to use as part of an overall compensation package.  This approach aligns the interest of the employer and the sales executive, creates an environment for long-term growth, and paves a strong path towards financial success.

 

David Hillelsohn, President DHill Financial, LLC an independent insurance professional.  David can be reached at 571.215.0361 with questions.  This is not meant to be tax advice, please consult a tax professional.

Life Insurance Considerations for Lenders

Trends in the Insurance Industry: Considerations for Lenders

Life Insurance Consideration for Commercial Lenders

For someone entrenched in the business valuation experience, there is nothing more satisfying then someone who spends time prioritizing what is needed to finance a successful project. Taking time to properly assess the value of a project not only reduces the cost to the borrower, but it can positively impact some of the ancillary expenses related to the project.

One of those ancillary expenses we often see associated with larger transactions is the purchase of life insurance which can be used to protect the interests of the lender and all parties connected to the borrower and other key members of the transaction.

Life insurance as a requirement of a loan agreement, however, can be an impediment to closing more business, and thus commercial lenders should keep these important tips in mind when broaching the subject of life insurance with existing and potential clients.

Life Insurance Tips for Commercial Lenders

Read the complete article in New England Banking here .

DHill Financial, LLC is an independent insurance agency focused exclusively in protection solutions for businesses and the people they support.  The core mission is to provide current and relevant insurance counseling in an environment which fosters comfort and confidence for all parties.  Licensed for life insurance and health solutions around the country, the agencies success is built on listening to the needs of our clients, and then reviewing the available options in the market with unbiased analysis.  It is our independent thinking and our unwavering commitment to only offer insurance solutions when appropriate that our client’s sense immediately.  Trust, Knowledge, Caring… Come feel the difference.  www.dhillfinancial.com

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