LINKED-BENEFITS
Bending toward flexible solutions
Looking at the world
through the lens of
the linked-benefit
industry, I’m
heartened by the
fact that flexibility
is in our roots.
In a moment where our world faces unprecedented challenges, it’s impossible to imagine
what the next year will bring. I believe finding a way forward will require flexible and
innovative solutions.
Looking at the world through the lens of the linked-benefit industry, I’m heartened by the
fact that flexibility is in our roots. When consumers became frustrated with the rigidity of
traditional policies’ “use it or lose it” approach to long-term care (LTC) protection, linked-
benefit products grew in popularity in order to offer more expansive and adaptable benefits.
Today, I continue to see trends toward flexibility play out in two main areas.
The power of cash indemnity
Using a cash indemnity model gives clients the freedom to use their benefit in whatever way
best meets their needs. This is in stark contrast to the reimbursement method, which can put
carriers in the awkward position of trying to anticipate potential health needs and design a
contract that accounts for those needs and expenses.
This can be a tall order for two reasons:
1. Health care is a fast-paced and rapidly evolving industry — how can we know what the
LTC landscape will look like 10, 15 or 20 years down the road?
2. Many experts warn the demand for LTC facilities outpaces the supply — what happens if
the only services covered by a client’s policy are unavailable?
With reimbursement policies, how clients use their benefit is limited by the terms defined
in their contract, which may or may not still be relevant by the time they make a claim. With
cash indemnity, clients have the flexibility to use their benefit however they’d like. Clients are
covered — whether they’re at home and receiving care from a family member, in a facility and
receiving care from a professional, and for everything in between.
Several carriers have already embraced a cash indemnity model and I expect we’ll see this
trend continue.
Brandon Heskett, CLTC, has been
in the financial services industry
since 2002. Brandon is a seasoned
business leader with experience in
business development, sales finance
and relationship management. He
is currently the National Sales Vice
President for Securian Financial’s
linked-benefit channel.
Premium-based policies on the rise
Designing products with a premium-based premium structure (as opposed to a charge-
based one) is another rising trend.
To understand what this means, it’s important to understand what a linked-benefit contract
is: a portion of the contract provides life insurance (the death benefit) and a portion of the
contract provides LTC benefits. Without getting overly technical, a charge-based linked-benefit
contract does not distinguish between the life insurance and the LTC portion of the contract,
while a premium-based contract does.
Treating the life and the LTC portion as separate entities of the contract can create a unique
tax opportunity for some clients (particularly small business owners) by offering potential
deductions and savings. This extra bit of flexibility can be a welcome relief.
Ultimately, there’s simply no way to anticipate or predict all that lies on the horizon. The
best we can do is provide clients with the resources and flexibility they need to meet their
needs — especially in times of profound uncertainty.
The views expressed here are Brandon Heskett’s own and do not necessarily represent those of Securian Financial. Please keep in mind that the primary
reason to purchase a life insurance product is the death benefit. This information should not be considered as tax advice. Policy owners should consult their
tax advisor regarding their own tax situation.
48
Perspectives
Q2 2020
These materials are for informational and educational purposes only and are not designed, or intended, to be applicable to any person’s individual
circumstances. It should not be considered investment advice, nor does it constitute a recommendation that anyone engage in (or refrain from) a particular
course of action.