During the month of December, I have been focusing on claims which includes our December Coffee Break webcast . If you haven’t viewed it, please take a few minutes to check it out. In the webcast, Niki Johnson talks about the claims process and a few tips that can help when submitting a claim to OneAmerica. Next week, we will release a new episode -on Tuesday morning at 10 am (EST).
I want to kick of 2024 with an idea for you to jumpstart the year. By simply mining an existing block of business, I am willing to wager that you can find at least 3 possible clients that might benefit from a long term care plan that includes and insurance solution.
The first thing that you need to do is simply this – identify clients who are between the ages of 45 and 85 with a solid retirement income strategy. My hope is that most clients have had that taken care of since many advisors focus on retirement income generation and not retirement income protection.
What is a solid retirement income strategy? Typically, it is one where the income producing assets are adequate to cover their needs along with a cushion to absorb some bumps in the road. Ideally, this will include life insurance, health insurance, and long term care insurance.
Remember, the OneAmerica consumer survey from 2021 found that 18% of the participants worked with an advisor to devise a strategy and 16% worked with an advisor to implement a strategy. To me, this sounds like a tremendous opportunity.
Where do you look for the opportunity to fund a policy?
There are many places –
- Current income
- Assets under management
- Qualified retirement accounts (401k, 403b, etc)
- Nonqualified deferred annuities
Your lowest hanging fruit will come from the nonqualified deferred annuities. Here is why.
Many people bought these annuities as an alternative to certificates of deposit (CDs). They were chasing a return (which they got) that came along with a gift of taxes at distribution. Most people just bought and held the annuity – rolling it over every 5 – 7 years – with no real purpose other than to hold on to it for an emergency.
According to a Gallup survey from a few years ago, almost 73% of the participants said that the annuity was intended to serve as an emergency fund for a catastrophic illness or to pay for nursing home care.
Remember this – when an annuity distributes money, typically, it is on a last-in first-out (LIFO) basis which means that what is distributed first is taxed. By using a Pension Protection Act aligned annuity that provides the benefit of turning tax-deferred growth into tax-free long term care benefits.
Consider the importance of this. Not only will it provide a tax-free source of money to fund long term care services, that distribution will not impact “means tested benefits” such as Medicare premiums. As you will recall, the IRMAA (Income Related Monthly Adjustment Amount) surcharge associated with Medicare benefits can be steep for someone with a high retirement income. And, a simple infusion of cash from an annuity could be a driver. So, why not reposition that into an annuity where the money continues to grow but is also available on a tax-free basis when a long term care event arises.
Again – look for consumers owning nonqualified deferred annuities who will not require it for income or who have designated it as their emergency fund. The ideal client can be as old as 85 and should be able to pass underwriting scrutiny. This one page knockout list should help you.
If you want to find the ripe fruit, you have to go to the right orchard. Consider all the clients 85 and younger with nonqualified annuities – that is the orchard.
It is the start of a new year and now is the ideal time to review your book of business and identify your clients who are over 75 and own annuities that are on the sideline and have been earmarked for an emergency. This is a big thing that can make a difference in preserving assets, control, dignity, and a legacy when an extended care event occurs.
This is what the million dollar annuity strategy is all about. The transformation of tax-deferred money into tax-free distributions for long term care. Learn more about it at https://fridayswithfisher.com/million-dollar-annuity/.
My “big ask” of you for the million dollar annuity strategy is to identify 3 or 4 annuity owners 75 or older who might be viable candidates for our leverage strategy then give us a call.
Fridays with Fisher 
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