Why It’s Time for the Long-Term Care Conversation

Why It's Time for LTC header

Here’s a list of the most important reasons to talk about long-term care insurance.

  1. Your clients

Clients rely on your expertise and recommendations when it comes to protecting assets and planning for their future. In many cases, your guidance is essential to their peace of mind.

That’s especially true with decisions about long-term care insurance. In fact, 90 percent of consumers surveyed agree their financial advisors should discuss LTC plans with them. (VerstaResearch 2017).

Your clients want you to bring it up – not because aging and health care are as engaging as steady portfolio performance. Rather, they likely know families and colleagues whose lives have been touched by the emotional, physical and financial impact of a health crisis. And your clients want to be prepared.


3 Keys to Producer Success

I am often asked by new and old agents alike, “What does it take to become really successful in this business?”  What I’ve learned over the years is that there is no one thing that, like a magic pill, will guarantee success.  Instead, there are three key things that, when applied consistently, can keep you on track for success and help you avoid failure.

1. Relationships. The relationships you build, nurture and value could be the single most important success strategy in your business – and your personal life.  While we cannot choose our family, we all make choices daily on who our friends are, who our idols are, who we hang out with, and who we choose to marry.  These choices have an immeasurable effect on who we become and how we see ourselves.  Just like the statement, “You are what you eat,” you become like those with whom you choose to associate.  The books you read, the TV shows you watch, the recordings you listen to, all combine like tiny threads to form a rope of bondage – or a lifeline.  Which one do you have?


Table 10-8-6: SWAT Underwriting to The Rescue

SWAT Underwriting to The Rescue

The SWAT Underwriting team at Highland is respected in the industry. Carriers know this team “plays fair” with their case requests and this engenders trust. When a borderline case arises, the carrier will give more consideration to the SWAT team. This is much like basic human nature — people will work harder to find a solution for you when they trust you. In the case study below, learn how this diabetic client benefited from the seasoned SWAT Underwriting team.

Client Profile

  • Client: Male, Age 35, Smoker
  • Health: Insulin-dependent diabetic, Age 14 onset
  • Life Insurance Requested: $4M IUL
  • Initial Offer: Table 10
  • Offer with Credits for Control: Table 8
  • SWAT Intervention Offer: Table 6

Typically, an insurance carrier’s best offer for an applicant who is a smoker and has insulin dependent diabetes is a Table 10. However, in this case, because the diabetes was well controlled, the carrier offered credits which improved rating to a Table 8.

The client did not accept the offer.

Enter SWAT.


Who needs life insurance?

Who needs life insurance? Well, almost everyone. Purchasing life insurance can seem mistakenly complicated and expensive – but it doesn’t have to be.

Some of the most common reasons people buy life insurance are to replace income, pay for funeral expenses, transfer wealth to the next generation, pay off a mortgage, or pass on a business. There are also many reasons people choose not to buy it. Other financial priorities get in the way or people mistakenly think it’s too expensive. If they have life insurance already, they may think they have enough despite life circumstances changing like getting married, having a baby, or buying a new house. Life insurance costs less than most people think. The fact is, a $250,000 term policy only costs, on average, $160/year for a healthy 30 year old.1

This video illustrates the need for life insurance and highlights common misconceptions while emphasizing its affordability. Share this video now with your community and encourage those you know to make an appointment and speak with an advisor today.

1Source: 2019 Insurance Barometer Study, LIMRA and Life Happens

Visit Highland’s social sites — LinkedIn, Facebook, Twitter, Instagram — and share this video with your online community or download it and share directly on your social profile. Spread the word about life insurance and make a difference in the lives of loved ones now.


LIAM: Start the Conversation Now

Life Insurance Awareness Month (LIAM) is the perfect opportunity to reach out to your clients about life insurance. Whether it’s a life event like a new baby or a wedding or divorce, circumstances change and so does the need for life insurance.

Many organizations like “Life Happens” will be flooding social media and advertising channels to remind consumers about the need for life insurance.  Don’t miss the opportunity, while it’s top of mind, to reach out and engage clients and potential clients during Life Insurance Awareness Month.


Life Insurance: It’s Not for You. It’s for Them.

Across the nation, September marks Life Insurance Awareness Month (LIAM). LIAM serves as a necessary reminder to individuals that life insurance is an important, and often forgotten part of financial planning.

The theme this year, “It’s not for you. It’s for them.”, by Life Happens, annual organizer of LIAM, is focused on who life insurance is really meant to protect – your loved ones. There are few better ways to illustrate this than by watching the role parents play in families.

Think about how many ways parents support their loved ones — the indispensable tasks they take care of on a daily basis. What happens when that support is interrupted? While life insurance can’t replace a loved one, it can make the financial path easier for those left behind. Once the life insurance is in place, it is done. No more thinking about it.

Encourage those you know to make an appointment and speak with an advisor today.


Have You Stress-Tested Your Premium Financing Proposal?

Have you stress tested your premium financing proposal

In order to educate clients on the inherent risks of a premium financing program, it is important to “stress test” any plan proposals. Stress-testing may involve any of the following:

  1. Illustrating the plan using reasonable increasing future cost of borrowing
  2. Illustrating the policy with a lower than current crediting rate, we suggest using 85% of the current rate
  3. Illustrating the combined effect of 1 and 2

The best way to demonstrate the importance of stress testing your premium financing cases can be illustrated by using a real example. Highland was asked to opine on a financed supplemental retirement income design, using a leveraged indexed universal life product. The client, a male aged 40, was to borrow $200,000 a year for ten years, accruing 100% of the loan interest, and repay the third-party loan at the end of year 15. He would then take an income of $434,105 per year for 25 years, beginning year 26 via participating policy loans.

Quick math on the proposed plan design:

✓ $2,000,000 of premium borrowed

✓ $528,000 out of pocket interest payments by the client, amounts over $40,000 accrued

✓ $10,852,625 of tax-free income

✓ $3,157,092 of tax-free death benefit

What could go wrong?


Best Practices: Financing Life Insurance Premiums

There are many ways to fund an insurance program. In most cases, the funding source is the checking account of the client or trust. However, what do you do when your client’s funding needs outpace their available liquid assets or gifting capacity?

Reading the title of this article would lead most to conclude that the focus is on clients who borrow funds from a bank to pay annual insurance premiums. That is not entirely wrong. However, when the team at Highland thinks of financing life insurance premiums, we think in terms of premium funding strategies. That includes commercial premium financing, but also private finance, split-dollar, sales to intentionally defective grantor trusts, and dual loan strategies.

There’s no free lunch

You may be familiar with the phrase, popularized by the award-winning economist, Milton Friedman, ‘there’s no such thing as a free lunch’. Commercial premium financing is no different, this is a pay me now, pay me later proposition. While the initial interest cost is very low, at 5% of the 1st year premium, the cost to simply service the funding escalates quickly reaching 50% by year ten. Not to mention the increasing collateral exposure the client must plan for annually. This simplistic example below assumes a static interest rate environment. An increasing cost of borrowing only serves to increase the ongoing servicing cost, or the outside collateral exposure.


Year-End Product Impacts Due to Principal-Based Reserving (PBR) & 2017 CSO Mortality Table Changes

Did you know that many products available today, which you may be presenting to clients and taking applications, must be placed inforce by the carrier on or before December 31st? You can thank Principal-Based Reserving or PBR and the 2017 CSO Mortality Table changes for accelerating year-end business.

What is PBR and why is it, along with the CSO Mortality Table change, impacting year-end sales?

Hint: It has nothing to do with your favorite beer.


SWAT Underwriting: The Secret to Competitive Offers


Not all cases are created equal when it comes to competitive offers from life insurance carriers — especially on the larger, more complicated high net worth cases.

More than ever, skilled and specialized underwriting makes or breaks the offer. With carriers becoming more particular about diversifying risk and managing capacity, they are inspecting large cases with caution — requiring more medical data and extensive financial information on applications with considerable face amounts, sizable premiums and complex funding strategies.

But it’s not just more information that is required. The information needs to be packaged and pitched to the carriers in a customized way that makes a strong argument for writing the risk.

This requires “know-how” in specialized areas of medical and financial underwriting, case design, advanced planning, and marketing.

Enter stage right — SWAT Underwriting — the secret to competitive offers.

Skilled

UnderWriting

Advanced

Tactics


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