Archive for April, 2011

An Uncommonly Beneficial Employee Benefit

April 28, 2011

Most employers have encouraged their employees to build a retirement nest egg by offering various pension and retirement plans.  What is almost always missing is the means to protect these accumulated assets from the high cost of long term care services. 

Long term care insurance as an employee benefit.  Advantages to employees:

1.  Employees become aware of a planning issue they can best solve while they are young.  Age based premiums are lowest, and there is less chance of developing pre-existing medical issues that can cause covereage to be denied.

2.  Premium discounts on the same coverage as if policies were purchased outside of an employer-sponsored plan.

3.  Simplified underwriting.  This means that many people who would otherwise be uninsurable can get coverage.  Only a few health-related questions are asked instead of many.  Typically height, weight, lists of medications as well as other troublesome questions are not asked at all.  Risk is spread by the larger number of people covered, so insurance companies are comfortable with digging less deeply.

4.  Changes the spouse/adult child from being a 24/7 hands-on caregiver to a manager of care.  Distractions of being a caregiver are reduced, thus permitting continuation of careers.

Long term care insurance as an employee benefit.  Advantages to employers:

1.  Education, discounts and underwriting concessions are appreciated by employees and create goodwill.

2.  Coverage can be offered with little or no cost to the employer.  Employer contributions can range from zero upward with many employers paying a minimal amount for basic coverage.

3.  As an incentive to offer coverage through the workplace, the Federal government allows employers to selectively pay for coverage by class of employee, thus making long term care insurance an excellent benefit to reward and retain key employees.

4.  Premiums paid by an employer are tax-deductible (based upon form of business organization).  Employer-paid premiums are not counted as income to employees, and when benefits are collected, they are received tax-free.

5.  Productivity is preserved through decreased absenteeism/employee turnover due to caregiving issues. 

Learning about long term care planning options is important for all sized employers and their employees.  Please contact me to learn more about the unique advantages of workplace-based long term care insurance.

Disclaimer: Actual policy language, rather than the contents of this eNewsletter always takes precedence.  Long term insurance policies vary from company to company & within the same company.  Raymond Smith, The Long Term Care Specialist, does not give legal or tax advice.  Consult your tax advisor or attorney for these matters.

 © Raymond Smith, The Long Term Care Specialist, 2011

Straight From the Horse’s mouth (so to speak)

April 28, 2011

Here are some interesting things I heard from Long Term Care heads of various insurance companies (said at a  National Long Term Care Insurance Producers Summit panel discussion).  

John Hancock:  2011 will be a year of transition as we develop long term care policies that are simpler and easier for consumers to wrap their arms around.  People have trouble understanding what they are buying.  Expect sales to be lower this year, then growing again in 2012.  John Hancock does an extensive review of claims every three years.  Now have 25 years of long term care insurance claims history.  Our recently completed claims review showed significantly increased benefits payments compared to the previous three-year review.  Hancock policyowners are now growing older, thus more claims coming in.  These major increases in claims, plus the continued low interest environment is the reason for our recent rate increase requests. 

Prudential:  The oldest baby boomers are now age 65, the youngest are age 47.  Studies have shown that people who have experienced long term care situations with families and friends are twice as likely to buy long term care insurance as those who haven’t.  Expects long term care insurance sales to grow by 20%-25% over each of the next five years.

Genworth:  Does not believe it possible to simplify long term care insurance much (interesting contrast with John Hancock’s comment).  Auto insurance as an analogy.  The problem has been that consumers need to work with specialists who understand how to best make this complex insurance product work for each individual, but specialists are hard for people to find.   Producers/advisors who only sell one or two long term care policies per year do not know enough.  Note: I hope this eNewsletter makes it easier to find at least this long term care specialist. 

MedAmerica:  Cash is as simple as you can get.  We pay our benefits monthly in the form of cash, which can then be used for anything.  We do not require receipts for a specific list of expenses the consumer has paid for.  Note: Most long term care policies reimburse for home care, adult day care, assisted living & nursing home expenses.  MedAmerica requires only that you meet the Activity of Daily Living or Cognitive Impairment benefit triggers.

Transamerica:   We plan to continue offering lifetime/unlimited benefit period as an option while other insurance companies have dropped it.  Transamerica is the only (major traditional long term care) carrier confident enough in our pricing to still offer single premium long term care insurance.

Disclaimer: Actual policy language, rather than the contents of this eNewsletter always takes precedence.  Long term insurance policies vary from company to company & within the same company.  Raymond Smith, The Long Term Care Specialist, does not give legal or tax advice.  Consult your tax advisor or attorney for these matters.

 © Raymond Smith, The Long Term Care Specialist, 2011