Shaking my Head Today

[wln417]

"1) I would never consider selling someone a LTC policy if they had only $80,000 in assets. If she wound up in a nursing home without a policy, she would blow through 100% of her assets within a year. True, home care may take a little longer. But, once she has spent down to Medicaid levels, Medicaid will step in and pay 100% of her care. "

Oh joy, just what everyone aspires to!

I always thought LTC was stay out of nursing home insurance.

No mention was made of her living situation, her expenses, nor why she was declined. Even your statement of her net worth is ambiguous, but I assume you mean her liquid assets not including her home.

If I was her, my income was $3,500 fixed per month, and my expenses were low enough that I could afford the premium (say around $2,000) without hurting my lifestyle, I'd leverage my income in a heart beat to make sure I never had to stay in one of those places.

I wouldn't use Money Guard, though.

 

[ltcadviser]

If I was her, my income was $3,500 fixed per month, and my expenses were low enough that I could afford the premium (say around $2,000) bla bla bla

How about inflation? Rate increases on the traditional LTC policy?

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I assume you mean her liquid assets not including her home.

You think? Yes, the $80,000 did not include her home. Are you looking to pitch a reverse mortgage next?

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I wouldn't use Money Guard, though.

Mighty nice of you.

 

[wln417]

Sorry. I didn't mean to hurt your feelings.

Next time I'll just blindly agree with everything you say.

 

[Charlie456]

I agree with Jack for the most part. LTCi (traditional or hybrid) is not appropriate for her. I would respectfully explain to her why I wouldn't recommend a plan for her. If she still wanted coverage I would put a small plan together for her, have her sign the personal worksheet where she acknowledges that the I advised against a plan as well as put my own letter together explaining why that I would ask her to sign.

My motivation in selling her a plan has nothing to do with making a buck. I just feel like sending her away is throwing her to the wolves. Some advisors just focus on the 1st year commission and could care less about what's right.

I'm curious, was she declined due to her health or did they not accept the app because of her answers on the personal worksheet? Maybe she's already got a serious health issue going on and the advisor was trying to get her something a little too late. Many people think MoneyGuard's "simplified UW" means the qualifying criteria is more lax which is not the case.

 

[CALTCAgent]

Anybody have the suitability part of the Moneyguard app or know what it is ?

 

[ltcadviser]

I agree with Jack for the most part. LTCi (traditional or hybrid) is not appropriate for her. I would respectfully explain to her why I wouldn't recommend a plan for her. If she still wanted coverage I would put a small plan together for her, have her sign the personal worksheet where she acknowledges that the I advised against a plan as well as put my own letter together explaining why that I would ask her to sign.

My motivation in selling her a plan has nothing to do with making a buck. I just feel like sending her away is throwing her to the wolves. Some advisors just focus on the 1st year commission and could care less about what's right.

I'm curious, was she declined due to her health or did they not accept the app because of her answers on the personal worksheet? Maybe she's already got a serious health issue going on and the advisor was trying to get her something a little too late. Many people think MoneyGuard's "simplified UW" means the qualifying criteria is more lax which is not the case.

Health declined. Personal worksheet will let an applicant slide by with $50,000 of assets. Well, the New York Life application has much higher standards but that is the only one I can think of.

Now, in defense of the ACSIA agent possibly he did not bother to ask her for a detailed financial breakdown. I ask all of my clients about their assets and income levels. Maybe he does not.
(He should be asking though---can avoid possible issues later)

So maybe he would not have applied her for coverage if he had an idea she is poor.

 

[tgard27]

originally posted by wln417




When dealing with seniors (65+) an agent must be very careful about what products to (or not to) recommend. And, that's why E&O insurance is a must have.

Maybe my choice of "not too bright" was a little stretch, but if I ran into this type of case and in spite of my recommendation for her not to purchase either product, she insisted, I would request a sit-down with her and an adult child, if available.

Her decision to go ahead with the purchase would lead me to believe that she's not "well educated" (is that better than "not too bright?) on financial matters.

I would also have her sign a document stating that although her agent recommended she not purchase either product, after doing her due dilligence, she felt it was appropriate.


Jack,
Comments?

Jack,

I'm new to insurance and appreciate your point of view. Nonetheless, if the potential client is "not educated", shouldn't the agents job be to educate the client on the product and how it may/may not fit into her needs? She may be in good health, but not want to spend time in a Medicaid facility should she need some form of extended care. Maybe a small short term care product would be suitable, or an annuity? Who knows as it is tough to guess, but I would never recommend someone to dump off 2/3rds of their liquid assets into a product like that.

I would like your input on the idea of bringing in a child. To me, bringing in a child may not always be a great idea. The child may have an ulterior motive for his or her recommendations to the parent and said ideas may not be in the best interest of the parent. A small annuity might be a good fit in this situation, but the child might object to this idea(or any other ideas) not because they are a good alternative, but rather that they could cut into his expectancy of mothers estate. I am hesitant to bring in a third party unless I really think that the third party would be a neutral party.

Nonetheless, my past life has taught me the value of documentation and I absolutely agree that, if one were to sell a product in the situation above, that some form of full disclosure is signed.

 

[scagnt83]

"1) I would never consider selling someone a LTC policy if they had only $80,000 in assets. If she wound up in a nursing home without a policy, she would blow through 100% of her assets within a year. True, home care may take a little longer. But, once she has spent down to Medicaid levels, Medicaid will step in and pay 100% of her care. "

Oh joy, just what everyone aspires to!

I always thought LTC was stay out of nursing home insurance.

LTCI is about protecting assets. She has no assets to protect.

If she purchases a MG policy at that age with just $50k the benefit would be minor. Which means she would be stuck with Medicaid after 1 year - 3 years depending on the type of claim. So either way she will be out of money and on Medicaid in 1-3 years.


If she uses 57% of her income to fund a traditional policy at $2k/m as you suggested (that would never pass underwriting with most carriers). It would be the same situation. All she could afford is a 2 year policy max.... and it might cover all or most of home care depending on where she lives. So at best she will be on Medicaid after 3 years, at worst she will be on it after just a year.


No matter what way she goes about funding LTC the results are the same. That is why insurance of any type does not make sense. She is better off with the funds being liquid.

 

[wc2624]

I would also have her sign a document stating that although her agent recommended she not purchase either product, after doing her due dilligence, she felt it was appropriate.

It's on the suitability form. "My agent doesn't recommend it but go ahead...."

Sit down with her and a family advocate (i.e. child) and say that the first thing we're going to do is fill out the suitability form, have her sign the above before moving forward.

 

[scagnt83]

And don't get me started on her "financial adviser."

I would bet its not a real financial advisor. Someone with only $80k in assets usually does not spend $1k-$3k per year on financial advice.

Possibly a tax preparer, or a friend or family member most likely. Maybe a lawyer at most... but I would bet money its not a true Financial Advisor who is licensed. And if it was they probably told her that just to get her out of their office and try to pawn her off an some poor insurance agent... lol