Selling Annuities In Tandem With LTC Insurance

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Many long term care insurance producers insist the only way to sell the product is to sell it and it alone. But, there are those who feel it can be advantageous to both producer and client to sell other products as well.

For instance, there is a “powerful connection between annuities and LTC insurance,” says Celeste Cobb, vice president, Long-Term Care Group. She works in the Westport, Conn., office of MetLife.

“Both are all about planning for longevity. Annuities are designed to help people not outlive their money and LTC is the same discussion,” she says. “Its about preventing you from being in a situation where the care you desire will not be affordable.”

Because of this connection, “within MetLife there is a lot of work being done connecting the two. MetLife has some very strong producers in the annuities marketplace, so were making that connection for them,” Cobb says.

At companies where agents are trained to sell all the companys products, it is often left up to the agent how to handle selling both annuities and LTC insurance.

“Our agents send flyers about what they sell,” notes Wendy Short, with State Farm Mutual Automobile Insurance Company, Bloomington, Ind. “If there is a new customer, the agents bring it up with the customer. We kind of leave it up to the agent how they want to handle” selling both annuities and LTC insurance.

Some producers suggest that the two products have very different purposes, and one must not be substituted for the other. For instance, annuities and LTC insurance are “completely separate entities,” according to James Cotto, managing director of investments, Cotto and Padovani Financial Strategies Group of Wachovia Securities, Mt. Kisco, N.Y.

“LTC insurance is for people over 60 who dont want to see their assets depleted,” he says.

LTC insurance should be used when clients have done their estate planning and want to “put an umbrella over it,” Cotto says. “I have clients who did not do it and it has totally eroded their net worth. Theyve had to sell their house,” he adds.

“An annuity is for people who are very well off and have done all the savings they can in profit sharing and 401(k)s. Its another way for them to save tax-deferred,” he says.

Buying an annuity “is a way to invest in the equity market and guarantee the principle is still there for estate planning purposes,” Cotto says.

Annuities are appropriate for clients on a fixed income who know they will not be living much longer, he says. “We use annuities for that person.”

As for LTCI, he says it has a place in estate planning–”because if something happens, you might need round-the-clock nursing.”

This article first appeared in the August 2003 issue of LTC e-Wire, an online publication of National Underwriter/Life & Health Edition.


Reproduced from National Underwriter Life & Health/Financial Services Edition, October 3, 2003. Copyright 2003 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.