Robert E. Burton LLB CLU ChFC AEP, Director of Advanced Planning

There is increasing interest these days in life insurance policies with long-term care (LTC) riders. One of the incentives for this combination of benefits in a single policy, compared to a stand-alone LTC policy, is that, if LTC benefits are never needed, the premiums paid will not have been “wasted”, since the death benefit will be paid instead. Of course, there are many types of insurance policies that are purchased for pure protection, and where, if no claim is ever made, the premiums paid can be considered to have been “wasted”. Everyday examples include homeowner’s or renter’s insurance, automobile insurance, and liability insurance. Indeed, one hopes that no benefits will ever be paid under these types of policies, and stand-alone LTC coverage is no different: one purchases it for protection in the event it is ever needed, but one hopes it never will be needed.

In essence, LTC benefits paid out during the insured’s lifetime are an advance against the policy’s ultimate death benefit and reduce that death benefit dollar-for-dollar. It is not surprising, therefore, that the addition of a LTC rider to a life insurance policy does not significantly increase the premium in most cases; after all, benefits paid under the LTC rider are not an additional payment by the insurance company but rather a payment made sooner in time. (There is at least one exception to this: under the John Hancock policies, a second rider, the MAX rider, can be added that essentially doubles the amount of available LTC benefits. This is particularly useful when the LTC rider is attached to a relatively small life policy. This rider is available in most, but not all, states.)

As with stand-alone LTC policies, LTC benefits under a LTC rider are either on a reimbursement basis (under most policies) or on an indemnity basis (Nationwide’s policies).

In the meantime, if anyone has any questions about any of the matters discussed or wishes to obtain illustrations, please contact Bob Burton: bob@provada.com or 415-369-9990, ext 116.

Los Angeles, CA - June 10, 2008 - A 55-year-old individual considering long-term care insurance protection can expect to pay $709-per-year for a base level of protection if they are married or $1,095 if they are single according to the 2008 Long-Term Care Insurance Price Index published by the American Association for Long-Term Care Insurance (www.AALTCI.org). Costs for coverage increased about four percent from the prior year.

The annual index measures current costs for top-selling long-term care insurance policies that offer consumers approximately $115,000 in current benefits (base-level coverage), with protection increasing yearly as the individual ages. "That coverage will grow in value to over $305,000 of protection in 20 years," explains Jesse Slome, Executive Director of the national trade organization that conducted the research. The study compares costs for plans that provide benefits for 3-years or longer with an annual compound inflation option that increases the available insurance benefits by five percent compounded each year.

"The analysis highlights the benefits of obtaining coverage at younger ages and taking advantage of discounts offered to those in good health as well as to couples," Slome explains. "Someone seeking protection equal to today’s average cost of care, about $55,000, would pay $1,064 a year for a policy purchased at age 55," he notes. Costs for long-term care insurance are priced to remain level throughout the life of the policy, though this is not guaranteed. "If that same person waited until age 65 and no longer qualified for a preferred health discount, they would pay $3,221 yearly to obtain an equal level of future protection." That assumes policy costs do not increase over the next 10 year time period.

2008 premium survey rates provided by LTCI Partners, LLC, Chicago, IL

This was just received from NAIFA-California regarding a Dateline NBC show that  applies to anyone in the annuity business, although it was intended for those in California; read below.

To All NAIFA-California Members:

Dateline NBC has been working on a project involving "unsuitable senior investments." 
The show will more than likely contain segments regarding annuity sales to seniors. 
While we don t know the exact content, we believe it is a good idea to watch the show. 
You may get questions from prospects and clients that have also watched.

Dateline NBC airs this Sunday, April 13 at 7:00 pm.

27% of households want life insurance, but only 12% actually purchase!

According to a 2007 LIMRA report, 27 percent of households with an income of at least $75,000 said they would buy life insurance in the coming year.* However, past data shows us that only 12 percent of households actually purchased life insurance policies. Why didn’t the other 15 percent buy? Most likely because their agents didn’t call on them to inquire about purchasing insurance. When was the last time you asked your clients to buy? Or have you asked them if they know anyone you can help?

Increasing Use of Home Care in Long-Term Care Insurance Policies

The 2007 Society of Actuaries’ examination of claim experience from 1984-2004, under long-term care insurance policies, shows a significant change in the types of services received as compared with their 2002 report (claims experience 1984-2001). Nursing home only claims dropped from 80% of all claims in the 2002 report to 55% in the current one. Home care only claims increased from 15% in the earlier report to 26% in the current one, while claims with both nursing home and home care rose from 5% to 19% of all claims.
1984-2004 Long-Term Care Intercompany Study
Society of Actuaries
November 2007
http://www.soa.org/research/long-term-care/research-ltc-study-1984.aspx

Trends in Employer-Based Retirement Plans

The number of employment based defined benefit pension plans decreased from about 170,000 with approximately 29 million active participants in 1985 to about 47,000 plans with about 21 million active participants in 2003. Conversely, the number of defined contribution plans increased from over 460,000 with about 33 million active participants in 1985 to over 650,000 with approximately 52 million active participants in 2003.
Employer-Sponsored Health and Retirement Benefits; Efforts to Control Employer Costs and the Impact on Workers
GAOGAO –07-355
March 2007
http://www.gao.gov/new.items/d07355.pdf

Disability Rates Steadily Declining Among Older Americans

An analysis of data from the National Long Term Care Survey (NLTCNLTCNLTCS) revealed that the prevalence of chronic disability among Americans age 65+ decreased from 26.5% in 1982 to 19% in 2004/2005. Of note is the fact that the rate of decline in the prevalence of disability steadily accelerated over the course of the 22-year study period, going from a low of 0.6% in the years 1982-1984 to a high of 2.2% in the years 1999-2004/05.
Kenneth G. Manton, XiLiang Gu and Vicki L. Lamb
Changes in Chronic Disability from 1982 to 2004/2005 as Measured
by Long-Term Changes in Function and Health in the U.S. Elderly Population
Proceedings of the National Academy of Sciences (PNANAS)
November 28, 2006
http://www.pnas.org/cgi/reprint/103/48/18374

401(k) Options: Encouraging Increased Participation and Saving

Findings from Hewitt’s 2007 Trends and Experience in 401(k) Plans survey indicate that automatic enrollment is on the rise, with the percentage of respondents automatically enrolling employees in their 401(k) plan almost doubling since 2005, going from 19% to 34% in 2007. Additionally, employers offering an automatic contribution increase option went from 9% in 2005 to 35% in 2007.
Trends and Experience in 401(k) Plans 2007
Hewitt Associates LLCLLC
November 2007
http://www.hewittassociates.com/_MetaBasicCMAssetCache_/Assets/Articles/401kHI07.pdf

Join Bill Upson for an eye opening Webinar on how to utilize long term care as an advanced planning tool!

REGISTER TODAY: Click Here!       DATE: March 4, 2008         TIME: 11AM PST    

Drawing on his years of experience, Bill provides the "How To’s" on:

• Using LTC to open the door to larger opportunities, such as advanced planning and money management.
• Improving the financial lives of your clients by helping them deal with family and business issues that have been festering for many years.
• Increasing your case sizes and yearly fees.
• Using the book, "Long Term Care… Alternatives and Solutions", as a valuable resource.
• Designing a financial plan for your clients that will preserve the physical, emotional, and financial well-being of the clients and their families.

Bill Upson is an experienced Financial Advisor, author of the book Long Term Care…Alternatives and Solutions, and co-author of the recently published book, Orderly Affairs - Pathways to Financial Freedom for Everyone.  He is a member of the Million Dollar Round Table and a 10 year Top of the Table qualifier, and has provided insurance and investment solutions since 1982.

REGISTER TODAY AND RECEIVE:  A copy of Bill Upson’s Long Term Care…Alternatives and Solutions.  Click Here! To Register

WEBINAR INFORMATION

Go to the web address below 10 min prior to the webinar, then call the conference call number for audio. Next You will need to punch in the conference code after dialing in.

Web Address: https://www1.gotomeeting.com/register/730958445

Conference Call Number: (605) 772-3434
Conference Call code: 126-527-837

This web conference will be conducted by:   Bill Upson CLU ChFC

Moderating, is Bob Burton LLB CLU ChFC AEP, Provada’s Director of Advanced Planning

You may have your reasons for not buying individual disability income (DI) insurance.

But do you know the facts?

Reason 1: I can always buy coverage later.
Fact: People usually don’t get healthier as they grow older, and coverage will cost more.

Reason 2: My family and friends will help me.  Or I will use my savings.
Fact: Are your loved ones in a position to support you? Do you want them to? And, even with saving 10% of your salary, one year of disability could easily wipe out many years of savings.

Reason 3: I have disability coverage through my employer.
Fact: Group disability insurance typically covers 60% of gross income, and benefits are usually taxable. Can you afford more than a 40% pay cut?

Reason 4: It costs too much. I’ll purchase it later.
Fact: The average annual cost is typically only 1% to 3% of what you earn. Plus, the longer you wait, the more likely the premiums will be more expensive.

Reason 5: It won’t happen to me/I expect to stay healthy.
Fact: During the course of your career, you are 3 1/2 times more likely to be injured and need disability coverage than you are to die prematurely.¹

Ask me how I can help you protect your income!
Your ability to work and earn an income is your most valuable asset - make sure you have the income protection you need!

IT’S LONG-TERM CARE AWARNESS WEEK!  NOVEMBER 4-11th.

Have you told your clients why they should plan for their Long-Term Needs?

It could mean the difference between financial and emotional security, or your clients winding up in a government-mandated facility. 

ENGAGE, PREPARE,  and INSPIRE your clients to take action with Bill Upson’s book,         "Long Term Care Alternatives and Solutions"

Bill Upson, CLU, ChFC, a Top of the Table producers, has created a powerful Long-Term Care resource designed to educate agents and clients on how to handle the unexpected.   This book is a great tool for those starting out in LTC; while also adding tremendous value to those who are experienced.

Drawing on his own experience, Bill provides checklists that aid in determining individual needs, and also provides guidelines on how to design a plan that will preserve the physical, emotional, and financial well-being of your clients and their families. 

This book provides all of the tools necessary to preserve your clients’ assets, pick up a book and learn more about:

• What long-term care is, and who needs it
• Medicaid / Medi-Cal and Medicare
• Policy Purchase Consideration
• Association Plans & Medical savings accounts
• Alternative ways to fund LTC
• Tax Implications
• And much more!

For your copy of "Long Term Care Alternatives and Solutions" Email: nickelle@provada.com

“C” Stands for Conserving One’s Assets for Oneself and One’s Family

Conserving one’s assets for oneself obviously must occur during lifetime (which clearly also serves to Conserve those assets for one’s family at death). Conserving assets during lifetime will be covered in detail in this newsletter.

Assuming one has done a good job of Conserving assets during lifetime, Conserving those assets for one’s family at death requires careful and thorough lifetime planning, even though this planning may not take full effect until death. This subject will be covered in detail in our next newsletter.

Conserving assets during lifetime - general considerations

One of the major problems facing all of us during our entire adult lifetimes is the possibility of some adverse, or even catastrophic, event occurring that could wipe out all, or a significant portion, of our assets. This is why almost all of us carry homeowner’s (or renter’s) insurance, automobile insurance, and liability insurance. Some of us in earthquake country also carry earthquake insurance, and some of us in low-lying areas also carry flood insurance. But all of these types of coverage protect only our hard assets. They overlook what are really our most valuable assets: ourselves and our future income-producing capacity. Those of us who work in the financial services field are in a unique position to help our clients correct this typical deficiency in their planning.

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