Barry J. Fisher

Susan M. BlaisSusan M. BlaisBarry J. Fisher/Paradigm Insurance Marketing

5425 Farralone Avenue Suite 101

Woodland Hills, California 91367

(818) 883-8700

www.bjfim.com

� View from 35,000 feet

� Rate increase indigestion

� Carrier updates

Linked products� Linked products

� CLASS – What we know can help consumers

� BJIFM Resource Update

� Practice Management in January

� I’m not privy to any insider information and if I was I wouldn’t share it with you anyway!

� Comments are based on info readily available to the general public

� Perspectives are based on history, research � Perspectives are based on history, research and a great deal of listening

� Comments on the industry, where we’ve been and where we’re headed are my opinions

� Do your own research and if you disagree let’s talk; I’m interested in your insights

� Traditional LTCi sales flat or up slightly in Q3◦ In this sort of economy I think this is pretty good!◦ Linked product sales are UP!

� The ever shrinking world of long-term care insurance◦ MetLife◦ John Hancock (CA only) – more on this later◦ Assurity

Low to no lapses on all blocks of business continue� Low to no lapses on all blocks of business continue

� Higher than expected home care claims

� Assisted living claims likely to be higher than expected?

� Constricted capital markets

� Low interest rate environment creates reserving issues

� Stock companies need to make ROE projections for Wall St.

� Too much business

� Not enough business

� Underwriting inconsistency

� Assumptions on older blocks of business continue to be problematic

� 5% compound inflation protection concerns

� Regulatory environment

� In-force rate increases have shaken agent and consumer confidence

� At the risk of sounding insensitive …..

� I’m not sure why?

� How many accident and health insurance products don’t have rate increases or benefits that terminate at a date certain?◦ Or auto, homeowners, term life or universal life

� LTCi has always been guaranteed renewable

� IF companies and agents tried to convince themselves and consumers that rates wouldn’t increase then they erred in their marketing practices

� Pre-rate stabilized products have few guardrails◦ Rate stabilization is no panacea

� New in-force premium Vs. what cost would be to start over� Future sales require clear disclosure

� Make sure you discuss this with your clients and document it!

� New business premium increase imminent

� Lifetime benefits up 15%

10-pay up approximately 50%� 10-pay up approximately 50%

� Applications into BJFIM/Paradigm office by February 15th

� Contact your BJFIM/Paradigm marketing representative for re-quotes and help

� “Old-Man” at the dance -- 36 years in LTCi

� 140,000 + paid claims◦ 46,000 + active

� Multiple solutions◦ Traditional◦ Linked

� Spousal discounts in play

� Pricing hot-spot – couples discount 40%� Pricing hot-spot – couples discount 40%◦ Couples 50 – 65

� Lifetime benefits

� 0-day home care elimination period

� Care coordination

� Consistent underwriting

� Business Solutions◦ 3+ Multi-life outside CA

� Top-of-mind name recognition

� Built block of business judiciously

� Cash alternative + 150% home care benefit◦ Cash benefits “on the cheap”◦ Great for high-end clients who want control

� Best Guaranteed Purchase Option in industry

Pricing hot-spot� Pricing hot-spot◦ Ages 50 to 65

� Six-year benefit period pricing “sweet-spot”

� Calendar day elimination period

� Restoration of benefits included

� Multi-life at 7 lives

� New clean block of business◦ Priced using updated actuarial assumptions

� Purchase lifetime maximum◦ $100,000, $250,000, $400,000, $500,000, $600,000, $750,000 or

$1,000,000

� “Dial-In” monthly benefit◦ $2,000 to $12,000

Calendar day elimination period� Calendar day elimination period◦ 0-day home care rider

� 40% cash alternative included

� Share care benefit – 3rd pool of money

� Variations on 3% and 5% inflation

� Accept Visa, MasterCard and American Express◦ Think travel or other award points offered by CC companies!

� Mutual of Omaha is a major player

� Lots of riders

� 10-day (33.3%) cash alternative

� 150% home care

� “Dial” an Inflation Protection Option� “Dial” an Inflation Protection Option

� “Uninsurable spouse” rider

� Lifetime benefits

� 0-day home care rider◦ Days don’t count toward facility care

� Pricing hot-spot is 65+

� Not out of the long-term care insurance business◦ Just not in California at the moment but they are

filed and trying to get back in the game

� View 2011 as a “time-out” opportunity

� Working on new products for 2012 and beyond

Growth opportunity in long-term care planning

� Low-cost universal life + chronic illness ABR◦ Nationwide◦ John Hancock

� Great for clients with permanent life insurance need + long-term care planning

� Single premium universal life◦ Genworth TLC◦ Lincoln Financial MoneyGuard

Clients 63 – 72 – have said “no” to traditional LTCi -- $750,000 + in investible assets� Clients 63 – 72 – have said “no” to traditional LTCi -- $750,000 + in investible assets

� 1035 exchange opportunity

� Single premium whole life + chronic illness ABR◦ One America Asset Care◦ John Hancock Life Care

� Clients 63 – 72 – have said “no” to traditional LTCi -- $750,000 + in investible assets

� 1035 exchange opportunity

� Pension Protection Act (PPA) Annuities◦ One America Annuity Care◦ Genworth TLC-A

� 70+ market place with some simplified underwriting

� 1035 exchange opportunity

Critical Illness

Final Expense

barry@paradigmins.com

“Provide individual with functional limitations with tools that will allow them to maintain their personal and financial independence

and live in the community through a new financing strategy for community living assistance services and supports”

Does this sound like insurance to you?

� Who is eligible?� Who is eligible?◦ Can you fog a mirror?

◦ Are you 18 years or older?

◦ Are you actively at work?

◦ Earn more than $1,120 per year?

� What will a $50 per day benefit cost?◦ Estimates run from $123 to $240 per month (CBO)

◦ UNLESS a full-time student 18 to 21 or under the Federal poverty level

� $5 per month

What Does The Employer “Opt-Out” Mean?

“If employers choose to participate in the CLASS program, all of “If employers choose to participate in the CLASS program, all of

their employees are automatically enrolled. The program is

voluntary because employees can “opt-out”. If a person

enrolls in CLASS, his or her employer is responsible for

withholding premiums through payroll deductions. The HHS

Secretary is required to develop procedures for an alternative

enrollment process for individuals who are self-employed or

whose employers do not participate in CLASS.”

The Heritage Foundation

� Budget gimmick◦ Offset $38 to $70 billion of PPACA

� CBO & CMS respectively

� Senator Kent Conrad (D-ND) Chairman of the Senate Budget Committee – “….a Ponzi scheme of the first order”.

◦ 5-year benefit deferral

� Budget Commission recommends fix or nix

� Most middle class Americans won’t be able to afford premiums

� All cash benefits with minimal claims oversight

� Adverse selection spiral◦ The worst risk pool imaginable!

� Cuts in benefits or premiums are likely to increase because HHS must have actuarially sound rates◦ Or the program can be cancelled

� Eventually to keep program solvent Feds will likely require employers to purchase on all employees

� Vests far too much authority in HHS Secretary◦ The “Uber-Insurance Company Executive!

� Potential of raising consumer awareness

� Original bill provides little in marketing dollars

� Non-profits and other social welfare organizations are likely to promote

At some point the employer will need to make a � At some point the employer will need to make a decision

� Now is the time to start talking to your business owner clients about likely choices and the fact that CLASS is a narrow gauge program for the uninsurable

� Long-term care planning with private insurance is the way to go for the vast majority of consumers

� Nominations for CLASS Advisory Council

� Hiring actuaries to crunch the numbers

� Anticipated benefit plan release October 1, 2011

� Hoping to “go-live” January 1, 2012

� Calls for repeal

� Stay tuned!

IF A CONSUMER CANNOT PURCHASE PRIVATE

LONG-TERM CARE INSURANCE DUE TO HEALTH

ISSUES SHOULD AN AGENT RECOMMEND THAT

THEY ENROLL IN CLASS?THEY ENROLL IN CLASS?

Would you ever recommend that a consumer

purchase an insurance product with bad

provisions or from an insolvent company?

barry@paradigmins.com

www.bjfim.com

CLASS RESOURCE SECTION +

BARRY’S BLOG

My Senior Care

January 26, 2011Breakfast (8:30am) & Lunch (11:30am) Sessions

Woodland Hill Country Club

$25 per person

� Assistance on creating a successful business plan� Assistance on creating a successful business plan

� Deepen relationships with existing customers

� Create new sales opportunities with existing clients

� Better manage time -- Work smarter not harder

� 20 per session – so get on the short list◦ Contact Susan Blais – susanb@paradigmins.com