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Why Consider Life Insurance with Long Term Care Riders?

Why Consider Life Insurance with Long Term Care Riders?

Why Consider Life Insurance with Long Term Care Riders?

January 8, 2021

Long-Term Care insurance is a product that will help pay for some of the costs associated with long-term care that are not covered by health insurance, Medicare, or Medicaid.

Many life insurance carriers offer combination life insurance policies that attach Long-Term Care benefits to the insurance plan. These are known as long-term care riders and can provide useful protection if you end up needing certain medical services that you otherwise would not be able to afford.

Long-Term Care Rider

A long-term care rider is a life insurance policy provision that allows you to receive a portion of the death benefit while you are still alive. The death benefit can be used to pay for long-term care expenses. This type or rider is similar to an accelerated death benefit rider, which most life insurance policies have, but the qualifications for them can be different. While the accelerated death benefit rider requires a terminal illness trigger it, and LTC rider can be triggered by the diagnosis of a chronic illness that leaves you unable to take care of yourself.

LTC riders are typically only available through permanent life insurance policies such as Whole Life, Universal, or Indexed Universal life. But there are options on Term insurance products.

You must choose your riders at the time of application for the insurance policy. If you choose an LTC rider to be added to your policy, your total premiums will be increased accordingly.

How does a LTC rider work?

The Long-term care rider add-ons allow policyholders to use their permanent life insurance death benefit while they are still living. To access the death benefit, a doctor would need to diagnose you with a chronic illness first. Examples of chronic illness can include:

  • Alzheimer’s disease
  • Diabetes
  • Arthritis
  • Epilepsy
  • Asthma
  • HIV/Aids
  • Crohn’s Disease
  • Mood disorders
  • Cystic Fibrosis
  • Multiple Sclerosis (MS).

Many other diseases may be classified as a chronic illness, but your insurance provider will have the final say on whether your situation meets its criteria for triggering the benefits of an LTC rider.

To be diagnosed with a qualifying chronic illness, you typically must have a licensed health care professional certify that you have a chronic illness that restricts you from performing at least two of the six activities of daily living (ADL). ADLS include:

  • Eating
  • Bathing
  • Dressing
  • Toilet use (personal Hygiene functions)
  • Transferring (getting in and out of bed without assistance) Maintaining continence.

Before the insurer will pay any benefits, you must show the impairment for 90 days, which is known as the elimination period. Once the impairment has been certified, the insurance provider will begin to reimburse long-term care costs.

What does LTC rider Pay for?

Typically, the combo LTC and Life insurance policy will pay for services that help you perform ADLs. If you cannot complete ADLs, then you may require an in-home caregiver or admission to a long-term care facility. And LTC rider typically pays for these expenses.

Long-Term Care Benefits payouts

An LTC rider will usually offer two payment methods: lump-sum or monthly payment. The simplest form of payout from the LTC rider is the lump-sum payment. In this case, once you receive the check from the insurance company, you can freely spend the funds however you want on living or medical costs.

Monthly payments or reimbursements can be slightly more work compared to lump-sum payouts. With this payout plan, you would be reimbursed for the amount of money you spent on long-term care during the month. Therefore, it is crucial to keep accurate records of the long-term care costs you incurred and then submit the receipts to your insurance company for payment. You may be allowed to choose between these two options, but some insurers make the choice for you. Make sure you understand the terms of the LTC rider before purchasing one.

Should I purchase a Combo Life Insurance Policy?

There are several factors to consider when deciding whether a life insurance policy with an LTC rider is right for you. By using the LTC rider, you will be directly reducing the death benefit of the life insurance policy. This could affect your financial planning if you still intend to leave money to your dependents. Furthermore, with rising costs of long-term care you may find your death benefit has declined to zero if you require care for an extended period of time.

A combo life insurance policy should not be your sole life insurance policy if you need income protection, like paying for a mortgage or college tuition. These types of policies are specifically designed to be paired with permanent life insurance and can be used in the event of long-term care needs. If you need simple death benefit coverage, then we would suggest a term insurance policy, which is a significantly cheaper option.

However, there are some advantages to life insurance with an LTC rider. One main advantage is that premiums for a combo policy are locked in. With a stand-alone long-term care insurance plan, the provider may increase premiums yearly.  For example, Genworth, one of the formerly largest long-term care insurance providers, increased its policy premiums yearly by getting state regulatory approval. With a combo life insurance plan, you are locked into a steady premium rate.

In addition, you are guaranteed a return on your premium. In case you need long-term care, the premiums that you paid into the life insurance policy can be returned to you and used for assisted living expenses. On the other hand, if you never need long-term care, your policy still works as normal life insurance that pays a death benefit to your beneficiaries when you pass away.

For all of your questions that you might have with respect to why the combo life insurance and LTC policy is such a key solution in this current environment contact us here at Pinnacle Financial Services to discuss the main questions and concepts that you can utilize in discussions with your clients surrounding this important planning provision. We can also assist you with putting together illustrations and discuss why this planning solution can and should be discussed with clients moving forward.

For more information, contact a Pinnacle Financial Services representative today

1 (800) 772-6881 x7731 | sales@pfsinsurance.com

Will Torrance

Will Torrance

Senior Sales Director - Life, Annuity, & LTC

x7790 | wtorrance@pfsinsurance.com

Contact a Pinnacle Representative if you have any questions.

1 (800) 772-6881
support@pfsinsurance.com

Contact Us

Contact a Pinnacle Financial Service representative today for assistance.

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Annuity Electronic Applications

Annuity Electronic Applications

Annuity Electronic Applications

September 23, 2020

As we have been confronted with the environment of the COVID-19 (Coronavirus) restrictions, we must address how we do business with clients remotely. With this in mind, many agents have had to transition to conducting virtual meetings and electronic applications. This process has been available in life and Medicare insurance for quite some time, but agents can also take advantage of this process with annuities as well.

There are a few reasons as to why this process is not only more efficient but also in this environment, a preferred way to continue to do business in a less threatening manner.

  1. Avoid the hassle with paper applications while decreasing the time it takes to process.
  2. Decreases likelihood of incomplete applications
  3. Shows real-time application status
  4. Supports multiple methods to get your application signed electronically
  5. Policies get issued sooner which means you will get paid sooner.

It is important to understand just how much every sales industries’ ability to sell has changed. For instance, most appointments for senior products would be conducted on an in-person basis. Unfortunately, this was basically outlawed in the beginning stages of the pandemic and somewhat still continues today. A vast array of these restrictions are state-based and can vary. You can check out our information page on that here. This has made remote technology and applications extremely important in continuing to conduct business across the country.

Pinnace Financial Services partners with all of the top annuity carriers to get you top commissions and unrivaled technology. Our dedicated marketing team will help you from submission to commission. It is crucial to have someone that is able to give you detailed and accurate illustrations for your clients, and our team will do just that. Don’t just partner with any broker. Pinnacle Financial Services has you covered!

For more information, contact a Pinnacle Financial Services representative today

1 (800) 772-6881 x6003 | lifesales@pfsinsurance.com

Will Torrance

Will Torrance

Senior Sales Director - Life, Annuity, & LTC

x7790 | wtorrance@pfsinsurance.com

Contact a Pinnacle Representative if you have any questions.

1 (800) 772-6881
support@pfsinsurance.com

Contact Us

Contact a Pinnacle Financial Service representative today for assistance.

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Why Consider Life Insurance with Long Term Care Riders?

Fixed Annuities Provide Retirement Security

Fixed Annuities Provide Retirement Security

July 28, 2020

Clients entering and in retirement have an inherent need for peace of mind. Peace of mind for paying their bills, for their lifestyle, and for longevity. Fixed annuities provide the retirement security needed to give senior that piece of mind.

The Bull market officially ended in March 2020. Stock indices sunk well below the 20% marker, signaling the start of a bear market. By most measurements, this was the longest bull market in the last century and a half. As a reference, the bull market ran from March 2009 to February 2020, a full 131 months’ worth of overall yearly gains.

Here is the prevailing question though. How long and how deep will the bear market be that follows a long-standing bull market? Will we experience the prolonged previous deep bear market environments of the 1930s, 1970s, and the 2000s, that followed the long bull markets of the 1920s, 1960s, and 1990s, or will we break from history?

In the two previous periods with long bull markets, the decade and a half that followed produced endpoints that did little to justify a buy and hold approach to investing. So, timing the market is not an advisable strategy, it also does not mean the avoidance of the market altogether. So, the money invested should be money that you will not need for a significant number of years, should a prolonged drop in the market occur. For those no market risk to principal dollars, it is worth looking at a Fixed indexed annuity

Difference between volatility, loss, and risk.

Volatility is the degree of price movement over time. Loss is defined as a decrease in financial value. Wall Street has tried to replace the word loss with volatility, even though they are significantly different. Lowering volatility does not necessarily eliminate loss. An example would be if your goal is to double your investment, and this was accomplished, you should ultimately be indifferent to the intensity of the roller coaster ride it took to get you to your goal. Areas, where volatility would be bad, is Social Security income; if it ranged from $1,000 to $3,000 per month over a period of years but in the end, you averaged $2,000 per month over a pre-determined period could you handle this up and down variability?

A justification for limiting volatility is that typically losses often accompany times of great volatility so that volatility reduction lessens risk. Reducing volatility may lessen the risk of loss, but there is not enough real data yet to tell-but even if it is true it is meaningless in the fixed annuity space.

Securities-to-fixed Annuities Definitions: Risk

Securities: Risk is the degree to which it is possible to lose what you already have; loss of dollars, or value.

Fixed Annuities: Risk is the possibility of earning less of a return (interest) than you might otherwise get.

Risk in the Fixed Indexed Annuity (FIA) world is much different than in the investment world. With securities, the risk would ultimately mean the loss of money, referencing the past. By contrast, FIA risk is a large opportunity cost, which means that future interest earned might turn out to be less than earned in another no-market-risk-to-principal value. Dollars allocated to FIAs are those that a person wants protected, from losing what they have, with the goal of earning more interest than could be earned in CDs, fixed annuities, and other alternatives. If this current period resembles in any way those periods at the end of other bull market runs, there are a lot of people with money invested in the market that based on risk needs, should not be invested there. But the mentality is that somehow, they will miss out on that next upward swing.

Timing your move into FIAs

When is the best time to transition over to an FIA? It typically seems a counter-intuitive move to place money into the FIA, but these instruments proved their worth during the last two bear market cycles. Based on actual performance a person extracting money from the S&P 500 index fund for example in 1999 or 2000 and getting the average return in an FIA, had three times the gain 10 years later compared to the person that stayed in the S&P 500 index fund.

Example

  • $100,000 in S&P 500 Index Fund
  • $100,000 in FIA allocated to S&P 500 with a 5% cap
  • Based on a 5-year period

E.G. Crash of 08. If you had a crystal ball you would have gotten out at the end of 2007. If you kept invested your $100,000 would have dropped to $62,576 just one year later. By the end of 2012 if you had stayed invested your account would have been worth $108,555. But by the end of 2012 in the FIA your account would have been worth $115,763, with no ups and downs.

Safeguarding the future

We do not have a crystal ball to determine when the next bear market will be, or the severity. So, protecting what you have is of the utmost importance, especially if you are approaching retirement. With Fixed indexed annuities we can safeguard the present so that money is available in the future.

By considering what is important to you with respect to the value of your money, your current situation, and risk-reward feelings, it is an opportune time to consider the FIA as a legitimate solution based on our current environment. Our team at Pinnacle Financial is acutely aware of all the options available in this segment. If you would like further information on the use, and the ultimate benefit of this solution, contact us today and let our team discuss all of the options.

For more information, contact a Pinnacle Financial Services representative today

1 (800) 772-6881 x7731 | sales@pfsinsurance.com

Will Torrance

Will Torrance

Senior Sales Director - Life, Annuity, & LTC

x7790 | wtorrance@pfsinsurance.com

Contact a Pinnacle Representative if you have any questions.

1 (800) 772-6881
support@pfsinsurance.com

Contact Us

Contact a Pinnacle Financial Service representative today for assistance.

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5 Mistakes to Avoid in Retirement

5 Mistakes to Avoid in Retirement

5 Mistakes to Avoid in Retirement

July 8, 2020

You have spent a lifetime planning for your retirement goals, perhaps you have contributed to a 401(k), possibly contributing assets to an IRA, and other investments. Now you are on the verge of retirement. However, the planning does not stop just because you have retired.

Here are 5 steps to avoid making mistakes that you have so diligently planned for during your working years.

1. You apply for Social Security Benefits too Early

You can apply for benefits at age 62, but the benefit you will receive could be as much as 25% less than if you wait until what the Social Security Administration considers “Full retirement age.”(FRA)

Electing to receive benefits before your FRA can reduce your benefits if you decide to keep working. For every $2 you earn above a certain threshold, which is $18,240 in 2020, you lose $1 in benefits. Unless you really need the money, consider waiting to apply. If you can afford it consider waiting until age 70 when your benefit will be around 32% higher than that at FRA.

2. You fail to take a more conservative investment approach.

When you were younger you could afford to invest more aggressively because you had time to recoup any losses that occurred in your investments. As you approach retirement though, the game changes. You are going to need the assets you have accumulated for day-to-day expenses and no longer have the luxury of time that you had previously.

Especially during the early years of retirement, when your beginning to withdraw assets from your retirement nest egg it is important to employ a strategy that considers capital preservation. An annuity with an income benefit could be a perfect fit. Without this consideration, the combination of spending and volatile market conditions might deal your portfolio a hit to which it cannot recover.

3. You spend the way you used to spend

Hand in hand with a more conservative investment approach is a more conservative budget. You do not necessarily have to compromise the retirement lifestyle you envisioned for yourself, but you do have to maintain a realistic approach to your finances.

Since you are no longer earning a steady income-or working less-your income might not be as high as it once was. A lifetime’s worth of retirement savings can look like an enormous source of assets that you can tap into whenever you want, but your retirement might last as long as 30 years or more. It is important to take inventory of your expenses, identify all sources of income, and develop a strategy to maintain your retirement lifestyle for as long as you live.

4. You Miscalculate your Required Minimum Distributions (RMD’s)

Generally, once you reach age 72, you must take annual distributions from your 401(k)’s, Traditional IRA, Simplified Employee Pension (SEP), and Simple IRA, or other qualified retirement plans, whether you need them or not. (Roth IRA’s are exempt from this provision.) However, they have some flexibility as to when they must take this first-year distribution. The account holder can take it during the year that they turn 72 or can delay it until April 1 of the following year, known as the required beginning date. This means that if you opt to delay your first distribution until April 1 of the following year, you will be required to take two distributions during that year; the first year’s and second year’s required minimum distribution.

These so-called Required Minimum distributions (RMD’s) are generally taxable at your individual tax rate and, if you fail to take them, you are subject to a substantial penalty-an excise tax of 50% of the RMD or whatever portion of the RMD that you fail to take. RMD’s are based on IRS life expectancy tables; while you can access these tables online and do the math on your own, we suggest consulting a CPA, or tax advisor.

On a side note, if you participate in an employer-sponsored qualified retirement plan(other than an IRA-based plan) and are still working for the plan sponsor, you don’t have to start taking RMD’s at age 72 unless you own more than 5% of the plan sponsor, or the terms of the plan require all employees to start RMD’s at age 72.

5. Not taking health care expenses into account

More than 56% or more are somewhat or very concerned about not having enough money to pay for unplanned medical expenses in retirement, 6 in 10 have done something to avoid or minimize health care costs, and 40% are only somewhat, or not at all confident in their plan to pay for health care costs beyond what Medicare covers. This according to a Nationwide study.

These results are not unexpected given health care cost trends. The average couple will need $285,000 in today’s dollars to pay for future health care needs in retirement, excluding Long-Term Care.

What is more, it is estimated that 70% of people over 65 will require extended care at some point in their lives? Approximately 1 in 7 people over 65 will require Long-Term Care for more than 5 years. Because of statistics like these, recognizing the need for Long-Term Care is another important issue to consider in terms of asset erosion.

One option is a Long-Term Care insurance policy to protect the assets you have accumulated and allow you to provide a meaningful legacy to your loved ones. It may also provide more options for your care and relieve your loved ones from becoming a full-time caregiver.

For all the resources that you need to educate, inform, and plan for your client’s retirement needs, rely on Pinnacle Financial Services to provide all of the meaningful, and necessary solutions. Assist your clients in living the retirement that they have planned and not one that is forced upon them.

For more information, contact a Pinnacle Financial Services representative today

1 (800) 772-6881 x7731 | sales@pfsinsurance.com

Will Torrance

Will Torrance

Senior Sales Director - Life, Annuity, & LTC

x7790 | wtorrance@pfsinsurance.com

Contact a Pinnacle Representative if you have any questions.

1 (800) 772-6881
support@pfsinsurance.com

Contact Us

Contact a Pinnacle Financial Service representative today for assistance.

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Social Security Benefits

Social Security Benefits

Social Security Benefits

June 19, 2020

In 2020, about 65 million Americans will receive over one trillion dollars in Social Security benefits.

As your clients get closer to retirement they begin to think about Social Security. They know they have been contributing, but what does that mean for them in retirement.

What options do they have available? What factors should be taken into consideration when filing for Social Security? The choices made will make all the difference.

Visit our YouTube Channel for Social Security Training. CLICK

Snapshot of One Month Example: December 2019 Beneficiary Data

Retired Workers

$45 million

 

$67.7 billion $1,503 average monthly benefit
Dependents

$3.1 million

 

$2.4 billion

 

Disabled Workers

$8.4 million

 

$10.5 billion

$1,258 monthly benefit

Dependents

$1.5 million

$0.6 billion
Survivors $6 million $7 billion

Social Security is the major source of income for most of the elderly.

  • Retired workers and their dependents account for 73.2% of the total benefit paid.
  • Disable workers and their dependents account for 14.5% of the total benefits paid.
  • Abut 89% of workers aged 21-64 in covered employment in 2018 and their families have protection in the event of a severe and prolonged disability
  • Just over 1 in 4 of today’s 20-year-olds will become disabled before reaching age 67.
  • 67% of the private sector workforce has no long-term disability insurance.

Survivors of deceased workers account for about 12.3% of total benefits paid.

  • About one in nine of today’s 20-year-olds will die before reaching age 67.
  • About 95% of persons aged 20-49 who worked in covered employment in 2018 have survivor’s insurance protection for their children under age 18(and surviving spouses caring for children under age 16).

An estimated 178 million workers are covered under Social Security in 2019.

  • 49% of the workforce in private industry has no private pension coverage.
  • Two-Thirds*67% of workers are saving for retirement. Having an employer-sponsored retirement savings plan is a key factor in whether Americans save for retirement. Only 27% of those without access to an employer-sponsored plan said they have any retirement savings.

In 1940, the life expectancy of a 65-year-old was almost 14 years; today it is just over 20 years.

By 2035, the number of Americans 65 and older will increase from approximately 56 million to over 78 million.

There are currently 2.8 workers for each Social Security beneficiary. By 2035, there will be 2.3 covered workers for each beneficiary. 

Statistics can tell a story of the situation, and the issues that are present with those prevailing statistics. Social Security is a right and unfortunately, too many have not planned accordingly to supplement this right. If someone retiring today is going to rely solely on Social Security benefits, many issues will arise for them as they stand to live 20 years or longer in retirement. Mainly increased healthcare costs, deteriorating health, and decreased access to agreeable care.

There are solutions though. It is a burden on us to inform, educate, and advise those that are about to retire their options and to show them ways to maximize the benefits that they have worked years to accumulate.

For more information, contact a Pinnacle Financial Services representative today

1 (800) 772-6881 x7731 | sales@pfsinsurance.com

Will Torrance

Will Torrance

Senior Sales Director - Life, Annuity, & LTC

x7790 | wtorrance@pfsinsurance.com

Contact a Pinnacle Representative if you have any questions.

1 (800) 772-6881
support@pfsinsurance.com

Contact Us

Contact a Pinnacle Financial Service representative today for assistance.

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