Thought for the day:
The difference between a meeting and a funeral is that you know why you are at a funeral. Unknown
If you will read no further:
When the next “crash” occurs, most of our clients will see their accounts drop by $10,000 or $20,000 or more. Probably temporary, but a drop non-the-less. Take $20,000 now and purchase a long-term care “stop-loss” instead of a long-term care policy… one time, paid up, even tax deductible. In some cases it is totally paid for with tax free income. Now you have protected several hundred thousand dollars of their estate from a very high risk, high cost event. Read on for specifics or call me or your marketing director for details.
Thought for the week:
Do you sometimes wonder just what it takes to get people to adopt you as their advisor; or once committed, to actually agree to move on your advice? A recent “Fear of Financial Planning Study” conducted by Nationwide Financial showed that 83% of adults over 18 are afraid of another financial crisis and 62% are scared of investing in the stock market. Only 58% fear death and 57% fear public speaking.
As financial planners we sometimes lose sight of the fact that part time observers of the markets (our clients and prospects) will never have the deep understanding of how it all works that you do. When you mix that lack of understanding with the fear of losing their money, then add a little of that greed that we all have, it makes it very difficult to make decisions that are ultimately in their best interest.
I had a prospect recently that was interested in (and could afford) a linked-benefit annuity with a long-term care rider for her 68 year old husband. He has type 2 diabetes and a metal plate in his head from an accident 6 years ago and she believes that he is a strong candidate for eventually needing long-term care. I was able to confirm for her that no conventional long-term care insurance would be available.
She approached me about linked-benefit (which was more appealing to her anyway) and after being told by the underwriters that they would be interested in considering such a risk, I showed her how she could move $100k into an annuity that would grow at current rates of 1.5% if she ever wanted to cash out and 2% if they needed the money for long-term care. Attached to that would be a pretty inexpensive rider that would pay substantial (one might even say “impressive”) benefits. I explained to her that the $100k would be in a safe A+ rated company and although there is a 6.5% surrender charge the first year, by the end of the 4th year her money would be over 100% refundable. Since the money had to reside somewhere when it came time to pay for her husband’s long-term care, putting it here would possibly give her access to insurance coverage not available anywhere else. By choosing the annuity to store some savings, she could purchase the LTCi rider (available from no other source) for a one-time payment of $23,000 that would pay for as much as $150K to $300K of tax free income. Pretty good, huh? But all that didn’t motivate her to move forward.
This is what did it. I pointed out that, after depositing the money in the annuity and acquiring the extension insurance, whenever she wanted, she could withdraw all but $1000 from the annuity and the “stop-loss” extension would remain in force for life. No commitment to the annuity. Now she can go for better returns on the principal and still have a “stop-loss” long term care policy in place with no further premiums and each year protecting hundreds of thousands of dollars of assets from being destroyed by long-term care costs. Now that she has alternatives with which she is comfortable, she is ready to put the strategy in place.
All the financial planners your prospect/client meets can invest, allocate, diversify and grow their money. You can provide solutions and strategies to solve their problems. Now that’s what I call financial planning.
Products like this vary somewhat from state to state, so pick out a client that you think should consider this concept and let’s work on it together to see just how impressive a case we can make.
PS. Don’t forget to ask me how we can pay for the “stop-loss” extension rider with tax free income.