LONG-TERM CARE
The question that lies at the heart of the replacement discussion is — Do evolving needs require an update and is a 1035 Exchange advisable ?
Dual purpose for policy reviews
We would like to proceed immediately to our proposed heresy . No policy should have ever been placed without an attempt to customize coverage specific to the policyholder ’ s need . Today , we cannot imagine a greater universal requirement than a contingency plan to offset long- term care expenses . Strategies for providing available funding for assistance , if needed , are now abundant in the life insurance marketplace . Options to provide care dollars are spread across the product firmament available at marginal to no current cost . Some provide accelerated benefits with reduced to nonexistent underwriting considerations . Therefore , enhanced access to additive benefits with streamlined underwriting considerations should already be screaming at you .
How do we say 1035 Exchange ?
Subsequently there ought to be a performance bounty on all life policies that do not include a long- term care planning option . We are suggesting that quality dual purpose mortality and morbidity solutions have taken the moral high ground . Progression to today ’ s opportunities follows a straight line : it began with the Health Insurance Portability and Accountability Act ( HIPAA ) expanding terminal illness definitions to include chronic illness . Combo benefit options were set free with the advent of the 2010 Pension Protection Act provisions , allowing internal policy benefit costs to take place in a tax neutral environment as well as adding long-term care insurance to 1035 Exchange chess pieces .
The most recent accelerant to growth arrived quietly in April 2016 when the Interstate Insurance Compact allowed the chronic illness claims trigger definition to mirror the HIPAA qualifiers for tax qualified long-term care insurance . Life riders can now pay health look alike benefits in cash .
Ronald R . Hagelman , Jr ., CLTC , CSA , LTCP & Barry J . Fisher , LTCP are Principals of ICE FLOE Consulting , LLC . With decades of expertise in the life and long-term care insurance industry , they provide product development , distribution & training strategies for extended care risk . www . icefloeconsulting . com
Gold standard in professionalism
Circumstances change and making sure one ’ s life insurance continues to fulfill intended goals remains the gold standard in professionalism . Sadly , despite best intentions , policy review often takes a backseat to new sales . Life stage changes continue to drive life and longterm care insurance planning . The question that lies at the heart of the replacement discussion is — Do evolving needs require an update and is a 1035 Exchange advisable ? Appropriate replacement is not twisting or churning . We see it as a balancing scale of justice ; financial policy performance weighed against and complemented by benefit or product availability .
Insurance agents and financial advisors that responded to our national survey , Who is Selling What ? To Whom , How & Why ? confirmed that the addition of a long-term care planning solution to a policyholder ’ s existing life insurance policy , via replacement , is a reason for policy review and consideration . Thus , in our opinion , the lack of a long-term care planning option on any life policy falls squarely into the arena of best practices .
Consumers in the sweet spot for long-term care planning should be made aware of the enhanced options available to them . Those with cash value life insurance policies not including a way to accelerate benefits to pay for care should know about combo plan choices . This is vital protection . We have an opportunity to place new and meaningful coverage in order to assure independence , peace of mind and financial security .
16 Perspectives Q2 2021