Thought for the day:

“Counting on your opponent to inform you when he or she breaks a rule is like expecting them to make fun of their own haircut.”                                                           Unknown

 

If you will read no further:

Then there is the story of the financial planner who is being threatened with a lawsuit by his client’s son (an attorney, does that surprise you?) for not offering his mother a long-term care policy.  He said she had plenty of money and didn’t need it.  Now she is in a nursing home spending $10,500 per month and it looks like that won’t stop any time soon.  Fortunately the planner has a lot of clients; so he can afford to lose this one as the son takes the account away.  I’m not sure what the deductible is on his E&O policy.

 

Thought for the week:

It was announced in the press this week that a prominent executive for a major broker/dealer is resigning his recently accepted position so that he could tend to the healthcare needs of his parents and in-laws.  This is a great illustration of the impact that long-term care episodes can have on one’s life as well as others around him.

I was discussing this very subject at a recent breakfast with a long time friend and very successful financial planner .  Three things he said impressed me most.

1. He mentioned that his aging clientele was “falling like leaves”.  With uncanny regularity they are announcing a move into a senior care facility or using home care because of dementia, or some other debilitating cause.
2. The toll that it is taking on the families of his clients is appalling; with kids and relatives fighting one another for the money; and who is responsible to take care of mom and dad.
3. He was glad he purchased a robust LTCi policy many years ago (as did I) because even though he has sufficient assets to pay for most likely care scenarios, it is comforting to know that when the time comes there will be extra money available so it will not be such an issue to the family.

I can’t tell you how many times I have heard advisors say that their clients don’t NEED to buy LTCi insurance as they have plenty of money to pay for it.  Clearly they have not yet experienced enough of their clients writing checks for $10,000 each month; or talked to the “kid” who’s upset at seeing his inheritance being wasted away on nursing care bills; and which sister is taking care of mom and which brother is AWOL, and on, and on.

And it could have all been avoided if the advisor would have just insisted on his clients moving some of their assets into a linked-benefit insurance contact before they got too sick to do anything but put up 100% of their assets to guarantee their care.  Tragic!

 

Most inane comment of the week:

“My client can afford to self insure for LTCi.  No, he really can’t move any money (one year’s worth of self insure) into MoneyGuard” (to multiply it 4-6 times for LTC.)

 

Rate Drop Announced:  There’s a surprise

TLC will drop rates for new contract in all states except CA CT FL HI IN NJ  NY .  Interest rate will go down effective 4/22 from 3.25 to 3.0.  If you have some proposals outstanding you should call clients and tell them now is the time to decide.   Long Apps must be received in HO BEFORE 4/22; TLC Quick request tickets in good order by 4/19 and interview completed by 5/11.

Thought for the day:

“We are all here on earth to help others.  What on earth the others are here for, I don’t know.”                                                            W. H. Auden

If you will read no further:

Financial advisors everywhere are discovering the new LTCi connection with Westland Financial.  You bring it up to your client and request a case design from us.  We give you 1,2 or 3 quotes (if you really want that many) from top carriers.  You present the case (we can help) and once the client say “yes”, we take it from there.  We take the application for you, manage the case through underwriting and send you the policy ready to deliver.  Then we pay you top comp and assist you in the future when service is needed.

Thought for the week:

We create dozens of SPIA annuity illustrations per week but only about 1/3 ever get placed in the clients’ portfolio.  Having observed this for a few years now and spoken with many advisors, I have come to the conclusion that it is the advisors who are “waiting for the rates to increase”.  In the meantime, their clients are receiving less and less interest or accepting more and more risk than they would like.

The typical SPIA is providing 6-8% income. 70% +/- tax-free.  That’s better than bonds and will last a lifetime.  It’s a personal pension the give the client the most secure, predictable income from any of the assets in the portfolio.  And if you are one of those advisors waiting for rates to go up, keep in mind that increases in interest rates have only a partial correlation to SPIA rates since a high percentage of the income is from principal.  The way to get the most total money from the SPIA is to start early and live a long time.  Waiting for rates to increase just reduces the total time they will receive the income.

Regarding those Variable Annuities; with the expenses and the portfolio restrictions, you cannot be seriously proposing them for competitive growth if you are also including the guaranteed role-ups and income riders.  Index Annuities have the same rollups and guaranteed income for half the cost or less and the client will never see their portfolio go down.  Wonder why variable annuity sales are down and index annuity sales are up?  Clients are buying the same guarantees you sold them in VAs but prefer the assurances    of safety of their money that Index products provide.  Call Josh and he will answer your questions.

By the way, the Fed met recently: They are going to continue on their path till unemployment hits 6.5% and inflation slows to 2.5%.  They predicted no change in rates till 2015. Then what; you think they are going to jump rates to 6% and destroy all the bondholders in the country?  Come on!

One more item before I let you go.

Idle money in a Forethought (A-) annuity for long-term care will provide up to 200% to 300% of the annuity value when LTCi is needed.  Another opportunity to increase your clients’ comfort level in these uncertain times.

Thought for the day:

The key to being a good manager is keeping the people who hate me away from those who are still undecided.                                                              Casey Stengel

If you will read no further:

The salesman assumes the LTCi policy will be used and the client assumes it won’t.  If an advisor insists on putting a linked-benefit product in the portfolio, they can both be right.

Gene Pastula, CFP

Thought for the week:

I had a situation come up this week that made me feel really bad; so I want to get it off my chest.  An advisor called me to see if there was anything we could do to get some LTCi coverage for a 73-year-old client who was recently diagnosed with the early stages of Parkinson’s.  As he discussed the case, I seemed to recall this client from a couple of years ago.  We had sent him proposals for LTCi insurance and for MoneyGuard.  When we followed up to see how the presentation went, he told us that she didn’t think she would need it, and that was that.  When I asked how she could possibly turn down his recommendation to move cash from a CD to this, he told me that he never recommended insurance, just presented options.  Then he left it to the client to choose.

I remember thinking, “When was the last time his doctor gave him a choice of prescriptions; or asked whether or not he would even like to take any at all?”  I also wonder how many clients of other advisors will be spending down their estates paying for care who could have had an asset in their portfolio that instantly leveraged itself 3 or 4 times; if only their advisor had strongly encouraged them to move the money while they were still healthy enough to qualify.

Do your clients a favor.  Take 15 minutes a week and think about the folks who could move $50k to $100K into MoneyGuard or a similar product.  If you would like a position paper to send to the client that will quickly explain the idea so they will want to pursue it, send me an email at genep@westlandinc.com and I will provide.  Then send the client specifics to us for a proposal.  Be sure to discuss it with us first if you have never presented this successfully.  There should be no doubt in your mind of its value before recommending it to your client.  We can even help you with the presentations until you feel comfortable that you can do it all yourself.

It’s always very sad when a client’s spouse or family announces to you that they are arranging for your client to receive care.  But it’s much more comforting to everyone to know that your plan will now add another couple hundred thousand dollars to the portfolio to help pay the bill.

An important read:

Wall Street Journal article recommends that advisors use annuities (SPIAs) instead of bonds when producing income for their retired clients.  Read it here.  See?  It’s not just me telling you this.

Thought for the day:

“ Life would be infinitely happier if we could only be born at the age of 80 and gradually approach 18. ”                                                                      — Mark Twain

If you will read no further:

Consider this.  It’s not a matter of if you die; it’s a matter of when.  Part of almost every older client’s financial strategy consists of leaving some money for kids, grandkids or charity. “Investing” in life insurance will yield a guaranteed IRR that will surpass anything you can do for them elsewhere; particularly considering the guarantees.

Thought for the week:

I spent half a day last week listening to a respected economist who counsels several hundred corporate executives and private investors on the current and future outlook for the economy, U.S. and worldwide.  His message was similar to what we are hearing from economist and analysts for the broker/dealers and investment firms that we are involved with.  “For the time being, everything is holding together.  But this not a healthy situation and will not last much longer”, he said.  He gave a very compelling argument for a modest recession beginning end of 2013-early 2014 with a pull back in the market of 25-40%.

Clearly the “goings-on” in Washington is not helping and the rest of the world sucks as well. ; China is starting to feel the pain as well; not anywhere near the problem that we have but they will.  And all of this portends the importance of protecting the portfolios, particularly of your older clients.

I’ll bet you are ready for me to say that MoneyGuard will solve their problems.  Good for you!  Actually, that is not what I was going to say.  But I like the way you’re thinking.

Buy only individual issues of Bonds; no mutual funds or ETFs please.  An annuity helps a great deal…not in place of, but in addition to your other favorites.  There is nothing wrong with 6, 7 or 8% income from some of their money with no risk or reduction when the next couple of recessions come around.  The tax benefits aren’t bad either.  Remember, 60% to 80% of most annuity income is tax-free.

And while the younger clients are sitting on cash in their portfolio waiting for the bad stuff to pass, encourage them to begin a couple of half-million dollar life insurance policies on both the husband and wife.  Life insurance from age 50 on is an investment, not just a need.  Consider this; its not a matter of if you die, it’s a matter of when.  Part of almost every older client’s financial strategy consists of leaving some money for kids, grandkids or charity.  Why not fund that legacy beginning at 50 or so with a life insurance policy that will pay LTCi benefits if needed.  Annual deposits for 10 years and done…or smaller ones for life if they wish.  Click here and see the internal rate of return on a life insurance investment beginning at age 50 or 60.  Then tell me how you will beat that in the next 20 years particularly when you consider the ironclad predictability of the results.

For California Advisors:

We told you 18 years ago that the LTCi  program offered by the  California Public Employee Retirement System (CalPERS) would not hold up.  Three rate increases since then and now the big Kahuna.  An 85% rate increase is on its way.  http://www.sacbee.com/2013/02/28/5223864/the-state-worker-did-calpers-lie.html

Some of your clients may still be young enough and healthy enough to look at alternatives, but most will be too old or too sick.  Call us and we can tell you which.

Encouraging your younger clients to purchase Linked-benefit life insurance from carriers like John Hancock will assure them that in years from now they will not have to face the circumstances that these folks are facing. Prepare them today with an insured sinking fund that will provide hundreds of thousand of dollars when LTCi  becomes a reality for them; and hundreds of thousands of tax-free dollars for their heirs if they are lucky and it doesn’t.  How good a deal is that???

Thought for the day:

Life expectancy would grow by leaps and bounds if green vegetables smelled as good as bacon.                                                                                Doug Larson

If you will read no further:

Some of you missed the article on the Longevity Bond a couple weeks ago click here to copy and read later.

Thought for the week:

I have been reading a lot lately about the coming “pop” of the bond bubble.  Billions of dollars will be lost when interest rates rise as the Fed continues to print more money and buy more bonds.  We common folk who use bonds to protect us from the volatility in the market and provide stable retirement income are going to be the losers.  By turning to dividend paying stocks we can mitigate the bond risk, but we are replacing it with additional stock risk.

The main use of bonds in a portfolio is to provide a stable retirement income; and in some cases we invest the income in stocks to dollar cost average for future additional needs. Consider the annuity (fixed version -VAs are just way too expensive) that can guarantee annual lifetime payments of 6% to 9% or more. Now with those clients who don’t need additional income at this point, you use it to dollar cost average into their managed account.

Your client is a 70 yr old widow in good health.  Cash in those bonds before they collapse and purchase a $150K immediate annuity that will pay 9,750 per year (6.5%) for the rest of her life.  As long as she doesn’t need to spend the income, dollar-cost average it into the managed account to accumulate another $140,000 (assuming you can net her 6%) by the time she is 80; at which time she could annuitized that for about 13,000 per year.  So now she has a tax-favored income of $22,750 (15.2%) off of her original $150,000 that will continue as long as she lives.

If we suffer from extreme inflation and interest rates rise, her deposits into the stocks will expand her total value and her income whenever needed….all this with a fraction of the volatility and risk that exists when all of her money is in stocks and bonds.

No.  I’m not saying do this for every client or with all their money.  For single retired clients, a portion of their money in this strategy, reduces portfolio volatility, improves the rate of return on invested money and increases predictability of results.   The less money your client has to support their retirement the more valuable the annuity element becomes.

Add a MoneyGuard or other long-term care product to the mix and she can protect a greater portion of her legacy to her children and grandchildren as well.

Thought for the day:

Insurance is always too expensive if you never make a claim.  If, however, it turns out that you collect benefits on your insurance, no one really cares how much you paid for it.

Gene Pastula

If you will read no further:

Most folks who ignore insurance in their practice do so at the risk of limiting their clients results.  Almost every day we get a call from an advisor looking for life or long-term care insurance for a client who is way too sick to qualify.  If we had asked that advisor three years earlier to recommend insurance he/she would have told us, “My client doesn’t need it”.  Most clients don’t need insurance.  But they sure want it when a claim is in sight.  If you use insurance in the portfolio like you use other instruments, stocks, ETFs, VAs, etc. it is amazing how much you can improve on the results your client will enjoy.

Thought for the week:

We have been hearing that the leading LTC insurers have all filed or will soon be filing for sex distinct rates.  Those that have not will likely face some anti-selection (assuming their rates are lower) that will certainly cause concern; prompting them to follow suit.
We’ve been told some will just raise rates for single women … while others will raise rates for all women.  In either case women will soon pay between 20 and 40 percent more than men for long-term care insurance as leading insurers move to sex-distinct pricing.  The issue has been reported widely in the media with no backlash, so I would anticipate that products will start being rolled out sooner rather than later.

You should be alerting your clients who have been “thinking about LTCi” and suggest they quit thinking and commence shopping to get in before rates are increase.  Women are often the drivers behind the purchase.  These rate increases will not only affect women living alone.  This applies to married couples as well.

I you would like to have a good news article to point folks to (for validation), here is the link to the AALTCI-placed news story in MarketWatch / The Wall Street Journal.
http://www.marketwatch.com/story/avoid-coming-long-term-care-insurance-rate-increases-for-women-2013-01-23

Insurers paid over $6.6 billion in claims last year according to the Association, and women account for 65 percent of all new claims opened.  Dementia, cancer, fractures, stroke, osteoarthritis and hip fractures or replacements are the most frequent reasons women require long term care insurance benefits.

Call us for quotes and design assistance.  This is a good time to experience the full service of Westland’s new LTCi division powered by LTCi Partners.  Get quotes, comparisons and case presentation material; and when the client agrees to go forward, let us know and we call them and take the app for you.  The next thing you need to be concerned with is delivering the policy that will arrive in a couple of weeks and deciding what to do with the commission. 

Thought for the day:

The trouble with learning from experience is that you never graduate.

Doug Larson

If you will read no further:

One of the finest products of the past 25 years is threatened with extinction.  The Single Premium Life insurance policy is under pressure to be taken off the market until interest rates return to their long–term averages, especially the ones that will pay huge income when long-term care is needed.  That said, they are still available now and we suggest that you make a list of all clients who should have them in their portfolio.  Then get with the program to inform them of this window of opportunity.

Thought for the week:

Introducing the Financial Longevity Bond Concept

Would your clients gobble these bonds up?  These bonds are AAA rated from several major issuers.  Guaranteed for life and designed to mature to pay estate costs and/or pay a monthly tax-free income for health care costs prior to death, they can actually take the place of long-term care insurance.

Called a Financial Longevity Bond, it guarantees your lifespan by compensating your heirs in the event your death occurs earlier than expected.  Like a zero coupon bond, its interest is deferred until your death or disability.  However, it can be redeemed at any time, if desired, for its original cost.

Because of the longevity guarantee, the value at maturity varies based on your age when you purchase the bond for your portfolio as well as the time of your death.  The amount of monthly dividend payable for healthcare is a function of the maturity value.  For example: a healthy woman in her mid 60s could purchase this bond and be guaranteed a lifespan well into her 90s.  If she purchases a $100,000 bond and dies earlier than expected, say age 70 the bond will instantly mature for $195,000, tax-free under the IRS Code sec. 101.  If she lives past the longevity guarantee period of 20 years, the bond will mature for $150,000 at her death.  At anytime, if she were to need convalescent care, the bond would begin paying her a monthly tax-free income to reimburse her expenses up to $6000/month for as long as six years, a potential total of $450,000.

The older you are when you purchase the bond; your longevity risk is less valuable.  Therefore, it is best to purchase this bond as soon as you can identify money in the portfolio that will not be invested in the markets.  Certainly this is an attractive alternative to a bank CD as the yield to maturity (if never needed for income) is between 3% at 7%…and in some cases even more.  And one more thing, special tax incentives also apply.

If you are interested in how you can acquire this for yourself or your clients, send me an email at genep@westlandinc.com .  Please don’t call as I love to respond to everyone as soon as I can when I can – even in the middle of the night.  Phone calls and voice mail messages just make it more difficult.

Thought for the day:

Don’t buy a putter until you’ve had a chance to throw it.

Does it really matter who said this first?

If you will read no further:

There is important news at the bottom about LTCi.  And now all you have to do is call us with your client’s info, we will design the best product strategy for the situation then help you with the presentation if you like, and then we will take the application, underwrite the case and send you a policy ready to deliver.  See attached and call us.

Thought for the week:

My radio woke me this Sunday morning to another financial show.  I don’t need to get up that early, but I never want to miss the investment advisors promoting their service.  This weekend I was on a local show promoting MoneyGuard and a series of seminars on long-term care, so I understand the process.*  As I lay there listening to these guys discussing index annuities (FIAs), it occurred to me that I should mention it to you because it is such a good story and they are almost outselling variable annuities.

You see, people are OK with giving up some of the “upside” in exchange for “no losses”.  Certainly, the past 10-15 years proves that avoiding losses trumps occasional big gains.

Currently though, it’s all about the Guaranteed Income Riders in VAs and FIAs.  That’s what folks want….to know what their future income will look like…at least some of it.

This is not an either/or discussion.  I know it’s difficult for some advisors to see the value in FIAs that limit the upside.  So they use VAs that require a conservative investment mix in order to  provide the costly GIR that most attracts the client in the first place.

Here is a thought.  Present a combination of the two to your clients.  The FIA will give the client the certainty of a growing retirement income base (at half the cost of the VA) while guaranteeing their principal. The rest invested in the VA without all the riders allows for the potential gains from a well-managed investment portfolio.

I just can’t help but believe the upside potential of the FIA (with the downside protection) is a lot better for the client then any bond at this point.  Cheaper too!

*If you would like me to do a radio show, or a client seminar for you, just let me know.  When folks hear the story, they all want the product.  Remember, “Everyone will buy long-term care insurance if they don’t have to pay for it.”

News you can use:

The leading LTC insurers have all filed (or will soon be filing) for sex distinct rates.  Those that have not will likely face some anti-selection (assuming their rates are lower) that will certainly cause concern; prompting them to follow suit. Since women account for 65 percent of all new claims, the anticipated increase in female rates is from 20% to 40% for widows and singles.  It stands to reason that you should bring this up to your clients who have not yet addressed this issue or have been “thinking about it”.  There is still some time to acquire insurance at the current non-sex distinct rates.

Thought for the day:

Don’t complain about growing old… not everyone gets the privilege.

Unknown

If you will read no further:

Several thousand financial professionals do their insurance business through Westland Financial…not always because their broker/dealer says to; but because they choose us for outstanding service, top tier products competitive comp and after sale client service.  Go ahead and take a couple more minutes a read about two new reasons for calling Westland.

Thought for the week:

Those of you who have received emails from me in recent months have perhaps seen the little picture in my signature block that encourages you to “click here” for an important message.  This is the latest in presentation tools to help you get the message out about linked-benefit LTCi and how simply it can become part of the clients’ portfolio.

Many people resist the idea of “buying insurance” for long-term care (and unfortunately, many advisors resist the idea of recommending it); but investing for long-term care if needed…..that’s another matter.  I will address that concept in later issues of Pearls, but suffice it for now that many people can “invest” money on an annual basis that will effectively yield results in excess of 7% /year and provide 5-10 times that amount if they do, in fact, ever need income for long-term care expenses.  Did you “click here” yet?

This 2-minute video can be customized with your contact information to be used in the signature block of your emails and/or on your website.  It has already been directly credited with several MoneyGuard sales and has been approved by many broker/dealers.  If you would like to have this video for your own use, contact Tim Morton at timm@westlandinc.com.  He will assist you.  Also, if you need assistance getting it approved by your BD, he can help.  He loves that stuff.

Announcing the Westland Hands Free App Process

Many new advances in products and services are coming from Westland this year that will help you do a better job for your clients and (in many cases) make more money in the process.  Number one on the hit parade is the new Westland LTC Insurance Services.  Very soon you will be receiving specific information including, carrier lists, contacting process, commissions, and the specifics of our exclusive Hands Free App Process.

Just imagine.  You identify your client who should consider long-term care.  Call Westland and speak with one of our experienced (average 15 years) counselors who will design the appropriate plan and send it to you with appropriate support materials and product comparisons if you like.  Once you have presented it to the client, (yes, we are available to help there as well) let us know that he/she is ready to move forward.  You are almost done.  We will call the client and take the application over the phone, answer any follow-up questions your client may have and re-assure them of the advisability of this action.  Within a week or so, you will receive a policy ready for delivery.  No more forms to learn or personal health questions to ask.  Clean and professional.

All this will be ready to go in two weeks.  But don’t let that slow you down.  Call Chris Ridd today at 800-238-8144 to request illustrations, get answers to commission and contracting questions and anything else that is on your mind.  We want your LTCi business, conventional products as well as linked-benefit and now there is no reason to go anywhere else for your long-term care get your solutions.