Why Single Premium?
Seniors are tired of low returns, high risks and many are seeking ways to recreate lost wealth for their heirs. Some need benefits for nursing or home health care but want to reap these rewards without the usual underwriting hassles and concerns. Some single premium life products provide an alternative to clients seeking living benefits with confined care and community care as well as a policy that provides a tax-free death benefit for their heirs.
Many of your clients and prospects may not like the idea of paying stand-alone LTC insurance premiums – they see it as too expensive or consider the option of self-insuring.
The problem with self-insuring today is the prohibitive cost of care and how rapidly it can deplete savings. Few have considered how much they will spend for example, should they need to take advantage of in-home health care or a confined care facility.
Here are some samplings of costs of care from 2017 taken from the National Clearinghouse for Long-Term Care Information, a site provided by the U.S. Department of Health and Human Services.
- $225 a day or $6,844 a month for a semi-private room in a nursing home
- $253 a day or $7,698 a month for a private room in a nursing home
- $119 a day or $3,628 a month for care in an Assisted Living Facility (for a one-bedroom unit)
- $20.50 an hour for a Home Health Aide
- $20 an hour for a Homemaker services
- $68 a day for care in an Adult Day Health Care Center
When you consider the average cost of care and the number of years care is generally needed it is not too difficult to make a case for a blended single premium product.
How Do Living Benefits Work?
Simply put, the death benefit can be accelerated to provide for home health care or assisted living facility for terminal illness.
These benefits are generally tax-free and if never used then the death benefit passes to the heirs also income tax-free.
Here is an example employing a currently available product:
- The Confined Care Benefit received each month is determined by dividing the death benefit equally over 36 months less an administrative fee.
- The Chronic Care Benefit received each month is determined by dividing the death benefit equally over 60 months less an administrative fee.
Other Potential Benefits of Simplified Issue SPWL
There are other substantial benefits to Single Premium.
- Simplified Issue Underwriting: Clients and prospects can avoid much of the hassle normally associated with underwriting and can qualify for standard issue rates in spite of minor health conditions.
- Liquidity: The cash value within the policy is available to the client in the form of loans or free withdrawals.
- Income Taxes: Life insurance death benefits pass income tax-free to beneficiaries
- No Probate: Because the value of the policy is paid as a death benefit the money will pass outside the probate process. This can save the heirs a significant amount of money and provide a much more tax efficient way for your clients to transfer assets.
Who Is Buying Single Premium
There are at least three very large pools of clients that Single Premium is perfect for.
- Clients or prospects with $50K or $100K just sitting in a CD, a money market account or savings account are an excellent candidate. There are literally millions of them. You’ll be able to provide them a much better alternative with SPL for all of the above reasons.
- Clients or prospects that do not wish to pay for stand-alone LTC or perhaps have been declined for stand-alone LTC, a product that combines benefits can be a great alternative.
- Clients that have annuities they do not plan to spend in their lifetime but rather to pass on to their beneficiaries.
In Summary: You can provide clients the security of knowing that they will have some long-term care benefits without having to purchase a stand-alone product. They can have a product that will increase in value, provide a tax-free income to their heirs should they not need to access these other benefits and one that avoids probate.
Do you need assistance locating new prospects? Or perhaps need assistance on how to open a conversation? Start with these Six Complimentary SPL Sales Tips or by joining our Single Premium Life University.
Contact us today and we’ll help you get rolling right away. Simply call us at 800-255-5055, and you’ll receive contact to commission support immediately or request information for a quote right now!
