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Michael C. Staeb, CLTC, LACP, LUTCF
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The Broker's Broker
Thoughts on Insurance Distribution from an Independent Wholesaler

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    Michael Staeb's 20+ years experience in wholesale distribution of life, long-term care, disability, and annuity insurance solutions gives him the unique perspective. His hands-on activities over his career have included working in the trenches of a career agency back-office, working hand-in-hand jointly with various kinds of financial professionals, and helping to protect clients directly.

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Why I Don't Recommend Traditional Long-Term Care

9/10/2021

 
I was recently asked by an advisor I work with why I don't recommend traditional long-term care (LTC) solutions. I wrote the following in response.

Staeb's Top 3 Reasons for NOT Recommending Traditional LTC Insurance

  • No Premium Guarantee – a quick google search will show you endless articles talking about the last 20 years of rate increases on traditional long-term care insurance. It’s so prevalent that insurers are required to disclose their rate increase history in the application. Most linked-benefit products can or automatically include a premium guarantee just by their nature of being a life insurance or annuity contract where guarantees are more common.

  • Use-It-or-Lose-It – traditional LTCi has NO death benefit, NO cash value, and usually NO return of premium option. It’s like auto or homeowner’s insurance in that if you never file a claim, you never get a benefit, your premiums just disappear. Linked-benefit solutions always include a death benefit, cash value, or return of premium, and in some linked-benefit products you can even get two or even all three!

  • Strict Underwriting – traditional LTCi is probably the most strict underwriting criteria of any product I’ve ever worked with. There is an industry saying that a good underwriter looks for reasons to say ‘yes’ to insuring someone and a bad underwriter looks for reasons to decline. I'd be willing to wager that traditional LTCi underwriting has something to do with that.​
None of this was to say that traditional LTC insurance doesn't have a good place. There are situations where it can be advantageous. The most relevant one is for clients who's net worth is high enough to not want to have to qualify for Medicaid LTC benefits, but low enough that Medicaid might be need to be a realistic back-up option. This is because traditional LTC insurance is the only LTC solution that offers partnership protection. LTC partnership is a state-private partnership where eligible policies can provide dollar-for-dollar asset protection at Medicaid claim time. Put simply, a partnership-eligible LTC insurance policy protects $1 of a client's assets from Medicaid spend-down requirement for every $1 of benefits paid by that private LTC insurance policy.

For example, if a client receives $300k in partnership-qualified LTC insurance benefits and had a net worth of $500k (in asset applicable to Medicaid spend down rules) that means the client only has to spend down $200k of those assets because the first $300k are protected because of the partnership program.

Check with your financial professional, state insurance department, and state Medicaid program for details of partnership availability, spend down requirements, and other topics discussed in this post.
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Cheers to 20 Years...Thank You!

7/15/2021

 
A special video message celebrating 20 years in the insurance and financial services industry.
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COMING SOON: Staeb Explains Insurance

5/19/2020

 
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Delivering Bad News

2/21/2019

 
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A young advisor recently asked me ​"do you have any advice around the type of lingo/phrasing to use when breaking news about worse-than-expected rates (due to obesity/high BMI, in this case) to a client?"

My advice is when a carrier clearly gives you a reason, especially something like build, as the reason for an offer you weren’t expecting, you’re not breaking any rules to include that in your explanation. That’s especially true if the reason is something disclosed on the exam (but not the lab results, which are explicitly confidential). As for phrasing, I would suggest something to this effect, adapted to to your communication style:

"I’m pleased to inform you that your application for life insurance coverage has been approved! However, it was approved at Standard Non-Tobacco rates due to your build. My team has checked a few alternatives in the market place and could not find any meaningful savings and recommends we accept this offer as-is. If you are able to improve your build I would be happy to help you reapply. Please keep in mind that due to the high occurrence of regaining weight, any weight lost in the 12 months prior to a new application for life insurance, half of that loss is likely to be added back for underwriting purposes."
In my experience, nine out of 10 clients that don’t get Preferred rates (especially those that are rated substandard) believe they are healthier than they actual are. Especially ones with chronic health conditions. The hear their doctor say “you’re in great shape” when the doctor really says, “you’re in great shape, for someone with congestive heart failure [or insert some other substantial health condition].”

Telling a client they have received a worse than expected rate class is never easy, but I hope this helps you with how to break the news, without feeling guilty about it. We do what we can for our clients and none of us like reaching the point of being unable to help someone secure the protection they want or need.
Photo attributed to MicroBiz Mag under Creative Commons 2.0 Attributable License, details available here.
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Answering Why I Do This

1/1/2019

 
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A book on my to-read list is titled "Getting Naked". No, it's not a graphic sex novel. It was given out as part of a training session I attended a couple years ago. The presentation related to this book was focused on professionals in sales roles figuratively stripping down and exposing why it is they do what they do.

I was attending this two-day event with my point-of-sale (POS) wholesaler colleagues who work within the same institutional distribution channels. The presentation was fantastic! Thankfully I had reached a point in my career I could quickly answer the question "Why am I an insurance wholesaler?" But had I ever shared that answer with the advisors I work with? Of course not. It hadn't even occurred to me to share it proactively. And here I am embarking on a new chapter in life and career and I'm still not proactively sharing the answer. To kick off 2019, here's my why...

Early in my career I recognized that knowledgeable and appropriate use of insurance solutions was not reaching every day American families. After considering the impact I could have as a retail advisor I decided to be the behind-the-scenes expertise helping a wide array of professionals who trust me to help them positively impact their clients and families. As a wholesaler, the impact I have on the financial security of everyday Americans is far broader!
Whether you're an insurance agent, accountant, financial advisor, attorney, investment manager, financial planner, stock broker, client, consumer, policy owner, beneficiary, trustee, or anyone who might be in need of knowledge I possess, ask away. If I can help you appropriately use insurance solutions, I will do my best to do just that.
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Michael C. Staeb, CLTC, LACP, LUTCF     ​21 Walter Martin Rd NE #2797     Fort Walton Beach, FL 32549     (855) 627-8232

Michael Staeb is licensed in AL, CA (0I38996), CT, FL, ID, IL, MA, MD, MO, NC, NM, NY, OH, OR, TX (2412011), VA, and WA.​
Copyright © 2019-2021 Michael C. Staeb. All rights reserved. Staeb and associated logo are trademarks of Michael C. Staeb.