To The Editor:
Long Term Care Insurance (LTCI) is a wonderful product…and is (or may be) the financial salvation for thousands of Americans who need expensive LTC services. However, it is a difficult product for many clients to understand, and it is difficult for many agents to grasp LTCIs nuances. Current LTC insurance policies have lots of “moving parts” and it takes competence to successfully (and ethically) market the products.
I teach basic Life & Health insurance classes for new agents to qualify for their licensing exam. Believe me, many of these new agents have significant trouble just understanding the differences between Term, Whole Life, Universal Life, etc. The course barely brushes the issues of Medicare, Medicaid and Long Term Care. And yet, when these new agents get that Life/Health license, they are “fully qualified” by the state to sell LTC insurance. It is absolutely no surprise to me that agents and companies are having problems with LTCI sales. Too many agents are ill-informed about the product, promise too much in their sales talks, and often sell only “price” versus quality and benefits of policies. I know, because I see it every day among my competition.
To me, its a no-brainer. If youre going to sell LTCI, you need to have additional training and special certifications. We dont need to over-regulate LTC insurance, but if the LTCI industry does not regulate itself (e.g., through mandatory certifications), believe me the Feds will step in to do so as the scandals become apparent. Remember the Medicare Supplement debacles of the 1980s? Stand by for news in the LTC insurance industry…there is a real chance that LTCI will take unfortunate hits in public perception, worse than in the early years of the product. Id love to see our industry organizations take the lead in advocating mandatory credentials for LTC insurance agents…now!
One possible approach would be for the National Association of Insurance Commissioners to create common standards for LTC insurance agents in the form of testing and/or accepting credentials as a substitute for testing. As an analogy, many states now accept the CLU professional designation in lieu of licensing courses and exams to acquire a state life/health insurance license. Similarly, states could accept certain designations (e.g., CLTC, CSA, CASL) as an agents qualifications to sell LTC insurance. In the absence of such designations, the agent would have to pass a specific exam to demonstrate competency in the LTC insurance area.
One more word…we cant just trust the LTC companies to train their agents. Its too hit or miss. One company Im appointed with does a great job and requires 4-5 hours of agent training each year to sell their policies. Other companies (big name ones) only require the appointment…no follow-up, no checking into my qualifications to sell the product. Personally, I believe that is formula for future disaster which has potential to squash a wonderful product.
Allen C. (Al) McLellan, LUTCF, CLTC, CLU, ChFC, CSA, CFP
Investment Advisor Representative
Lincoln Financial Advisors
Estate Tax Hits Middle Class Millionaires Hard
To The Editor:
After reading the letters published in your June 28, 2004, edition, addressing the estate tax repeal debate, I felt it was necessary to respond to them. Neither letter indicates who is most affected by the current estate tax law nor the actual amount of tax collected. In addition, they both fail to recognize the group that is most affected by it, namely the group I have titled the middle class millionaires.
Even with the increases in estate tax exclusion, the beneficiaries of this group will find 25% or more of the deceaseds gross estate being paid in taxes. Many of these middle class millionaires have saved all their lives. Their major assets are contained in their 401(k) plans, 403(b) plans, SEPS, Simples or IRAs and their personal residence.
Of the individuals in this situation, of which there are many, these two major asset groups will, in many cases, exceed the estate tax exclusion. In addition the beneficiary of the retirement assets will pay ordinary tax upon them at their own tax rates. Therefore a substantial portion of the estate will be taxed anyway.
Individuals worth $20 million or 30 million or more can well afford the services of CPAs, financial planners and attorneys to assist them in minimizing their estate taxes. It would seem that the middle class is the target of the tax code once again, much like the AMT tax.
The estate tax in its original form was to tax the truly wealthy. Today having $10 million in estate assets is no longer a sign of true wealth. In many cases, when the retirement assets and personal residence are eliminated they have very few assets left. Once again it would seem that our tax system penalizes those that save for their retirement and own the American dream. These individuals are not bastions of industry but merely individuals who felt that saving for their retirement was important. It was equally important to them that their heirs also should benefit from their actions.
What is truly needed is an estate tax that taxes the extremely wealthy. An exclusion of $10 million for each individual would go a long way in providing an estate tax system that is truly fair. That would then put the tax burden upon the extremely wealthy and not upon a growing group of middle class millionaires.
Brian E. Glickman
Certified Public Accountant
Reproduced from National Underwriter Life & Health/Financial Services Edition, September 3, 2004. Copyright 2004 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.