Blogs

The Long Term Care Discussion, Continued

Concerns about Long-Term Care (LTC) continue to be on the minds of the aging Baby Boomer population – 66% of Americans surveyed say Long-Term Care planning is important, but only 20% have discussed the topic with an advisor. Why does this discrepancy exist? Part of it may be the reputation of “old-school” stand-alone LTC policies with the “use-it” or “lose-it” benefits or maybe LTC coverage is not traditionally included in the conversation people have with their financial/wealth advisors during their planning. Whatever the reason, the conversation about Long-Term Care MUST be an integral part of any retirement planning you do as a wealth advisor. Being proactive before care is needed can make a lasting impact on your client’s quality of care, ability to maintain dignity and their family’s financial security.

Another Level of Financial Security
AgencyONE’s Case Design Department has seen an increase in requests to illustrate life products that include some type of LTC or Chronic Illness benefit. These products have improved tremendously over the years and offer a great way for you to provide more value to your clients and their families. These life products with living benefits provide more than just a desired death benefit; they add another level of financial security for your clients in the event they become ill and require expensive, long-term medical assistance. These hybrid benefits provide additional options to consider and typically include the following features:
  1. They are primarily designed for LTC coverage but linked to a life insurance policy;
  2. They are not tied to market performance;
  3. They pay benefits whether the client needs LTC or not (Benefit could be through a death benefit if not used for LTC); and
  4. They offer clients guarantees in premium, amount of LTC benefit, death benefit and even a refund of premium option.

The Long-Term Care Conversation

Many of AgencyONE’s carrier partners offer excellent Long-Term care hybrid products. During our Annual Meeting this past April at the Watergate Hotel in Washington, DC we invited Lincoln’s MoneyGuard Regional Marketing Director, Mark Buehner, to discuss their new MoneyGuard II product along with the new client presentation approach! Mark’s presentation garnered lots of interest and resulted in our hosting two MoneyGuard II webinars earlier this week (we hope you had the time to attend one of the two webinars on June 10th). If you were unable to attend the webinar or you would just like to hear it again, you may link to the recording here (recording password: eP6GpJqi).
Mark did an amazing job positioning the Long-Term Care conversation by providing the tools to educate your clients on the myths around Long-Term Care, a resource  for researching the Cost of Care in your clients’ area, and helping you assist your clients’ in identifying existing assets that could be used for Long-Term Care planning.  Click here for all the necessary MoneyGuard II marketing documents (these can be branded or private labeled for you) you will need to re-frame the conversation with your clients about Long-Term Care and its importance in their financial planning.
Let AgencyONE’s Case Design department assist you and your clients in navigating the LTC, Chronic Illness and Hybrid product landscape. AgencyONE has the product knowledge and planning expertise to help you and your clients find the best solutions to satisfy their insurance and financial goals and assist YOU in gaining the edge over your competition.
Please call AgencyONE’s Case Design Department at 301.803.7500 for more information or to discuss a case.

How AG-49 Has Changed IUL Sales

By Ed Stark, CLU

I recently read a very good article by LifeTrends which discussed the industry’s response to AG-49 focusing on the shift in Carrier Trends and Distribution Perspectives.

What is AG-49? It is an Actuarial Guideline adopted by the National Association of Insurance Commissioners for Index Universal Life (IUL) Insurance Illustrations and was designed to help create more uniformity around how life insurance carriers illustrate their index life products.  Implemented in 2 phases, the first of which took place on September 1st, 2015, AG-49 Phase I addressed how illustrated rates are calculated. Phase II took effect on March 1, 2016 and instituted additional illustrative stipulations.

The overall guideline provides uniform guidance for policies with index-based interest and:

  • provides direction in determining the maximum crediting rate for the illustrated scale and the earned interest rate for the disciplined current scale;
  • limits the policy loan leverage shown in the illustration, and;
  • requires additional side-by-side illustrations and product disclosures that will further the consumer’s understanding of the product.*

When the illustration restrictions were first instituted, many of our producers thought that IUL products would no longer be competitive. I reminded them that these products were still capable of obtaining higher rates but that the industry was now restricted in illustrating them according to the new guidelines. AG-49 addressed an illustrative issue and now product designs were forced to be shown in a more level environment with these maximum illustrated rates.  The products themselves remained mostly unchanged and could possibly perform as well as in the years before the regulations.

The LifeTrends article details the methods carriers are using to adapt to the AG-49 Regulation. Carriers have added key features and benefits that enhance the value of IUL products such as:

  1. Interest Bonuses – these help boost the returns of the underlying indexes without violating AG 49.
  2. Index Multipliers – these can be considered index bonuses since they also help improve the return on the crediting rate.
  3. Spread Death Benefit Options – these help to improve cash accumulation and income solves.
  4. Alternative Crediting Approaches – these offer options with different cap accounts, uncapped, and par rates.
  5. Volatility Control Accounts – these replace non-S&P type options in an effort to stabilize interest returns.

Many of our carriers have products that offer one or more of the features I listed above.  A couple of them have products that offer all 5 of them.    While these features can improve certain scenarios, they can also create more confusion with product design when we are trying to benchmark against other carrier products.

The key to the IUL sale is a thorough understanding of how the product works and how best to communicate the product “ups and downs” to your clients.  I regularly discuss IUL product design and differences with our producers. Let us help you offer your clients the best possible IUL solutions for their business, retirement and estate planning needs.

*AG-49 Regulation, National Association of Insurance Commissioners