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Case Study Corner: The $6 Million Man & The Hybrid
You probably know the Six Million Dollar Man as Lee Majors’ fictional TV character from the ‘70s, the former astronaut with bionic implants that gave him strength, speed, and vision far above human norms. Well, in our story, the man is married and both he and his wife are biomedical researchers with strong science skills, and a vision for solving important health problems. Their advisor came to LLIS recently because her clients (we’ll call them Lyle & Pam) were seeking the best method to fund their long term care. The advisor originally thought they should simply self-insure, mostly because of their high net worth. But Lyle & Pam really liked the idea of LTCi, with one big hesitation you’ve probably heard before: “What if we never use it?” Through the advisor’s research and conversations with Lyle & Pam, she learned that they had an old variable annuity with about $275,700 that was performing OK, but not getting spectacular returns because of the high M&Es. (Mortality and Expense fees compensate the insurance company for risks it assumes under the annuity contract, such as death benefits.) LLIS recommended one of the new hybrids, an Annuity/LTCi product, and Lyle & Pam were willing to give up some potential return in exchange for the LTCi option. Both were generally healthy (he has controlled blood pressure and she had skin cancer a few years ago). In less than one month, the clients had their policy in hand, thanks to expeditious work by LLIS, the advisor, and Lyle & Pam. They now own a hybrid with double duty dollars. The LTCi benefit available to each of them after 90 days is $620,563 (2.25 times the annuity value, and made possible because of the product chosen, which allows two people -- the annuitant and an eligible person -- to get the LTCi benefit). If they go on claim, they can each get a check for $9,402 per month to spend as they wish because of the optional indemnity rider. If they never go on claim, their beneficiaries will inherit the annuity balance just as they would any other annuity. As researchers, Lyle & Pam, with the help of LLIS and their advisor, realize that sometimes the newest products out there offer the greatest opportunities. In this case, the hybrid Annuity/LTCi was the best fit for their current financial situation and their end goals. Have you had a conversation with your clients about LTCi? Let LLIS help. Visit http://www.LLIS.com/advisor_tools.shtml, where you’ll find “LTC, How to Talk to Your Clients” and “Long Term Care,” two information-packed e-brochures, and visit http://www.LLIS.com/education.shtml, to view our hybrids webinar presentation: Long Term Care & Life/Annuities: The Hybrids Are Here! |
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