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LTC Riders: Tips For Insurers

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Check interaction with the life contract: If the rider is an acceleration vehicle, consider its impact on existing life values. This is less of an issue with stand-alone LTC riders. (Note: Interest is growing in adding LTC riders to term and universal life policies as a way to meet younger buyer needs. The term policies may provide for continued stand-alone coverage even when the term need ends.)

Look at pricing: These riders, especially the acceleration types and sometimes the stand-alones, take on the lapse experience of the life policy. Take into account interest discounting from time of LTC payout to death.

Consider the tax issues: LTC rider benefits are income tax-free if the rider is a qualified LTC. Thats desirable, but the insurer must meet a host of requirements.

Follow filings: This process takes a bit longer, partly because both life and health regulators may examine the filing. (Somewhat less likely for acceleration riders.)

Make a dedicated marketing effort: Often, the intended producers for the product are life agents who do not routinely include LTC in their arsenal of financial solutions. So provide them with LTC training and education.

–Cary Lakenbach

Reproduced from National Underwriter Life & Health/Financial Services Edition, September 10, 2001. Copyright 2001 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.

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