How often do you hear your clients dismiss long-term care insurance because they believe they cannot afford it? It is one of the most common objections, and one with several alternatives you can discuss with your client.
Have you reviewed the Ultimate LTCI Sales Script we published last week? In it you’ll find a useful method to start the conversation about paying for long-term care insurance. Since a picture is worth 1,000 words, use the infographic below to “show” your client the many ways you can help them make long-term care insurance affordable.
1. Intro Policy
Many carriers offer an option to increase, in the future, the amount of coverage the long-term care policy provides. That makes it easier for your client to take the first step. Over time, as their budget allows, clients can increase the amount of coverage. DIS will work with you to find the right carrier and product for your client.
2. Partner Cost Sharing
As we state in the Ultimate LTCi Sales Script, many carriers offer a considerable premium discount, from 10% – 30%, when both spouses or partners purchase a long-term care policy. DIS will help you identify the carriers and products that offer the most affordable plan for your clients’ needs.
3. Reverse Mortgage
Clients already on a fixed income and concerned about how they can pay for long-term costs may be interested in learning how a reverse mortgage might provide the additional income to pay long-term care insurance premiums.
Reverse mortgages can be government backed, and are available to homeowners 62 and older. A portion of the homeowner’s equity is distributed as a monthly payment for as long as the homeowner lives in the home. Generally, the advance on the equity, which is considered a loan, is paid back when the homeowner 1) sells the property, 2) when the home is no longer the primary residence, or 3) when the homeowner (and spouse) dies. One of the added advantages of a reverse mortgage is that the payments are usually tax-free. Download this brochure to share with your clients interested in learning more about reverse mortgages.
4. Health Savings Account
There are several benefits to tax-qualified long-term care insurance policies. One is that money can be withdrawn, without penalty, from an HSA (Health Savings Account) to pay long-term care insurance premium. The Ultimate LTCi Case Design Resource explains more about qualified long-term care insurance policies.
Your client may want to purchase or use an existing annuity specifically for the purpose of funding long-term care insurance premiums. In fact, this is one of the most commons ways to guarantee long-term care insurance premiums will always be paid, regardless of other changes in investments. Clients with qualified annuities often plan to use the Required Minimum Distribution when they reach the RMD age, 70 ½, to pay long-term care premiums.
6. Interest on Assets
Many clients are motivated to buy long-term care insurance to prevent their investments from being consumed by long-term care expenses. Clients with this profile probably have interest-generating assets. If the interest on such an asset is not being used for income purposes, you may want to suggest drawing the interest earnings on the asset to pay in full or in part, the long-term care insurance premium.
7. 1035 Exchange
The Pension Protection Act of 2006 included favorable tax treatment to use distributions from a non-qualified annuity to pay the premium on a qualified long-term care policy. Your clients with deferred annuities may apply for a 1035 exchange as a partial withdrawal to pay the premium. Many annuities allow up to 10% of the cash value to be withdrawn annually without being subject to surrender charges. Clients who are receiving annuity payments may designate a portion or all of the distribution to be paid directly to the long-term care insurance carriers.
In both cases, it is important that the monies be transferred directly from the annuity carrier to the long-term care carrier. Not all long-term care carriers accept a 1035 exchange to pay premium. DIS will help you find a carrier that can accommodate this payment option.
There you have it – seven affordable ways to pay for long-term care insurance. Contact us today to learn more or request an LTCi quote here. We are committed to helping you find ways to make long-term care insurance affordable for your clients.