Q&A on Long-Term Care and Other Insurance Topics


Richard T. Heffern, Director, Insurance Services

Q: Rick, please tell us a little bit about yourself including your professional background in the insurance field and your role at Ancora?

A: I am Cleveland born and raised, married with 6 children. I have roughly 30 years of experience in the life insurance industry. Over my career, I have been involved in starting organizations, working with and transitioning privately held second-generation family businesses and large public corporations. I joined Ancora in June 2017 to help develop a state of the art advanced planning life insurance business that integrates with the holistic wealth and financial planning approach that we take for families and businesses. 

Q: In terms of the insurance landscape, what are some of the most pressing issue facing individuals and organizations today that you see or are asked about frequently?

A: I am frequently asked, “Do I have the correct allocation of life insurance and disability insurance with regard to my family or business risk management and planning objectives? Are the products I have still best suited for my specific situation? Has the market evolved to provide additional product choices that may not have been available when I initially purchased my policies? Are there other techniques that I need to be aware of that may be appropriate for my situation?” My answer is very simply yes, we can help organize and advise in most every situation.

One of the most pressing issues faced by individuals and families continues to be that of long-term healthcare costs and how to manage that potential exposure. The cost of healthcare, specifically long-term care, continues to escalate. On average, the monthly cost of long-term care is $9,000-$10,000 per month and the rate of increase is 2-3% per year. It does not take long for this exposure to be $500,000 or more. For cognitive disorders (Alzheimer, Dementia, Parkinson’s etc.) this could easily double or triple this exposure. The good news is that, with a little planning, the opportunity exists to help offset much, if not all, of this exposure. 

Q: Specifically, what is the current status of the long-term care market for individuals and families?

A: The market had a bit of a rough patch several years ago as many of the early adopters that ventured into the market did not build the proper pricing models in order to account for an extended low interest rate environment, coupled with the actual costs of care provided. As a consequence, many companies raised prices to consumers or exited the market entirely. We are still witnessing some of those ramifications in today’s news reports.

Within the past few years the market and pricing has stabilized as insurance companies re-price appropriately while scaling back a lot of bells and whistles from their product offerings. Due to changing demographics and consumer desire for flexibility, many new and innovative products have been introduced that combine the potential need for long-term care coverage with life insurance or annuities. There are now what we refer to as Hybrid products that offer a long-term care benefit if needed, cash value if long-term care is not needed and a life insurance death benefit for family. These products provide a multifaceted solution for families now that want to protect the longevity of their assets. 

Q: How do consumers know if long-term care insurance is right for them or their family?

A: As time goes by, more and more people are witnessing the devastation that a chronic long-term care experience can bring on. I would suggest that anyone that is entering their late 40’s or older should have a conversation about this topic and explore whether it is right for their family. It used to be that anyone with more than $5 million of liquid wealth may not be a good candidate to consider purchasing long-term care coverage as they could sufficiently self-fund most any risk. With the advent of Hybrid products, we think the story has changed and should be a risk to consider off-loading as an asset or legacy protection device. Many times we can reposition a relatively small portion of assets into one of these products to provide a significant benefit in order to protect against future expenses, thus providing for a better risk adjusted return. We can also use “sleepy assets” such as old life insurance cash value or qualified money (IRA’s) that may never be needed or used in order to fund one of these product designs. 

Q: Ancora offers comprehensive insurance review services. Can you briefly describe your process and the potential benefits of conducting a review of your existing policies?

A: Our approach is really very basic. We consult, then we design and then we implement. This is very situational as everyone has their own story and dynamic. We take a great deal of time understanding each situation, which allows us to come up with strategies that meet with each objective that is uncovered. The landscape is broad and we have the ability to help anyone evaluate the simplest to the most complex personal, family or business situation. More often than not, we find an opportunity to add value in one way or another from a basic review, which could simply be a validation that the current product and design is perfect for the given situation. 

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