BFL MKT WP 5126 2016 White Paper copy

BFL MKT WP 5126 2016 Agent Communication Sheet (09-16)

Long unheralded, Short-Term Care Insurance (STCI) is growing fast due to its aff ordability and simplicity compared to long-term care insurance. Here’s how Bankers Fidelity’s® easy-to-sell Short Term Care Insurance is making a big diff erence for agents (and their clients) who are ready to embrace its enormous potential.

For seniors examining the potential costs and realities of nursing home care, the option of a Bankers Fidelity Short-Term Care Insurance policy can present an aff ordable and a" ractive alternative to self-insuring or purchasing Long-Term Care Insurance. The lower premium costs 1 and the fact that STCI policyholders can have their benefi ts fully restored, even a# er a short claim, all help you reinforce STCI’s intrinsic value proposition.

As more and more Americans begin to confront the reality associated with the future costs of healthcare – especially the huge generational burst of Baby Boomers now facing the limitations of Medicare coverage – many are discovering the a" ractive benefi ts of Short-Term Care Insurance.

As an agent looking out for your customer’s best interests, Short-Term Care Insurance (STCI) is a product that need not remain a mystery - especially for those who could benefi t from its a" ributes and aff ordability. A valuable, and in many circumstances, relatively easy product to sell, it provides aff ordable coverage to help off set the high costs of nursing home care. Compared to the complicated and o# en pricey premiums required for a Long-Term Care Insurance (LTCI) policy, a Bankers Fidelity STCI policy allows consumers time to make critical fi nancial arrangements should longer care become necessary.

At its simplest level, STCI is designed to pay benefi ts to help provide confi ned patients with professional-level care for periods of less than one year. This includes the same level of nursing home care they would receive as part of a LTCI policy. But the short duration of the policy – which more accurately refl ects the limited time many consumers actually need extended or personal care – also allows it to be much more aff ordable than LTCI policies, with a shorter elimination period.

What’s more, STCI can be an important tool in helping protect customers from the depletion of their assets if they require even a relatively brief stay in a nursing facility. It can also act as a safety buff er, allowing the insured the freedom to make the important fi nancial arrangements and decisions should a much longer-term stay at a nursing home turn into a reality.

A Strong Case for Short-Term Care Insurancehow agents and consumers are taking notice

SEPTEMBER 2016

1 “Short-Term Care Insurance Policies on the Rise,” Kiplinger, Oct. 2015


Agents and customers alike are beginning to take notice of STCI’s benefits, resulting in an uptick in sales of these policies. In 2015, sales of STCI policies increased by 19.6% compared to 2014 according to research from the National Advisory Center for Short-Term Care Information. 2

Why Should I Work with Bankers Fidelity’s Short-Term Care Insurance Products?

Bankers Fidelity has been in the insurance business for over 60 years, and has offered STCI policies for more than two decades. During that time, the company has developed an exceptional product that is efficient, a"ractive, and adaptable to your customer’s needs.

What’s more, the flexible nature of Bankers Fidelity’s Short-Term Care Insurance benefits will allow you as an agent to customize an offering with just the right mix of features. Your customers can choose the level of daily benefits they would like to receive, ranging from $20 ($30 in Georgia) to $300. A benefit period of either 180 days or 360 days is another choice that provides flexibility tailored to the needs or budget of a potential customer.

With a Bankers Fidelity STCI policy, the insured will be glad to know that their benefits are guaranteed renewable for life, and the policy can never be cancelled by the Company as long as their premiums are paid on time, either in advance or during the grace period.

There is also no prior hospitalization required under Bankers Fidelity’s Short-Term Care Insurance. The insured can enter a nursing facility directly from their home, rather than requiring a more complicated and burdensome transfer from another health facility.

If a potential customer is concerned about the ever-escalating costs of care, an optional 5% simple interest Inflation Protection Benefit Rider is also available for their STCI policy. 3 The daily benefit increases annually for 20 years, which can help to address a larger portion of those constantly rising costs for healthcare.

And while some carriers offer policies which place limitations on the kinds of impairments covered (or not covered) – an ongoing issue with LTCI plans – Bankers Fidelity Short-Term Care Insurance will pay full benefits for some forms of cognitive impairments. For example, there are no specific exclusions for confinement in a nursing facility due to Alzheimer’s or Parkinson’s disease.

A Crisis in Care

America’s rapidly aging population is pu"ing a new emphasis on the issues we all face as we get older – the highlight being the extraordinary costs that are involved in serving the care requirements of the elderly.

Many customers, especially those who have been unable to save as much for their retirement as they would have hoped, are beginning to confront the reality of potential care costs looming on the horizon. Others simply do not want to become a financial or personal burden for their adult children. They aim to maintain a level of independence rather than shi#ing the responsibility of care onto their families – either by staying healthy or by planning to cover expenses related to care.

2 National Advisory Center for Short-Term Care Information, April 20, 2016

3 Rider not available in all states


These concerns, it turns out, are well founded. Some 70% of seniors over the age of 65 will end up requiring some form of skilled nursing care. 4 The average cost for a resident of a nursing home in the United States is $87,000 per year for a private room, nearly $240 per day. 5 Not surprisingly, in most cases, the average nursing home patient runs out of money during the first six months of their stay, a situation that o#en forces them to go on Medicaid.

Those who have looked into the costs of buying Long-Term Care Insurance to cover the potential costs of an extended stay in a nursing home are o#en shocked to discover how expensive premiums can be, and how difficult it is to go through the underwriting necessary to set up a policy.

Medicare benefits may not provide the level of assistance many need, with coverage for post-hospital extended care that only covers a 100-day period. Even with Medicare approval for a nursing home stay, a patient in 2016 will still be required to cover a co-pay of $161 per day a#er the first 20 days. 6 That could mean costs as high as $57,960 for a 360-day stay, a situation that would likely deplete many retirees’ savings; should both spouses need care, that financial impact would be even greater.

Here is where the value of Short-Term Care Insurance begins to come into focus. How would your customers feel if they found out that for a relatively small monthly premium payment, they could have a policy that would reduce those out-of-pocket costs to $0? Be"er yet, the nationwide average STCI premium is just $105 (at age 65) to $141 (at age 70) per month, 7 and a Medicare-approved stay in a nursing home, for less than one year, could be entirely covered.

That translates into a potential savings of tens of thousands of dollars, even for a less than full-term stay. That can be an a"ractive benefit when your customers are considering their financial futures.

How Bankers Fidelity’s STCI Works

With up to 360 days of nursing home benefits per confinement – and the ability for a 100% restoration of full benefits a#er six consecutive months of being nursing home confinement-free, Short-Term Care Insurance is designed to cover the majority of all nursing home stays at a price that is much more affordable than long-term care insurance. (h"p://bflic.com/Knowledge-Center)

What’s more, individuals up to age 80 can purchase STCI benefits, with much less complicated underwriting – generally STCI applications typically have fewer health questions 8 – than an LTCI application requires.

4 2015 Medicare & You, Centers for Medicare and Medicaid Services, Sept. 2013

5 Genworth 2014 Cost of Care Survey, p. 19

6 https://www.medicare.gov/coverage/skilled-nursing-facility-care.html

7 http://www.aaltci.org/short-term-care-insurance/



Short-Term Care Insurance benefits are generally payable under the following circumstances:

1. A patient’s nursing home stay is determined to be medically necessary by their physician; and

2. Patients are unable to personally perform any two of the five Activities of Daily Living: dressing, toileting, transferring, continence or eating (in Pennsylvania, two out of six including bathing).

Many Short-Term Care Insurance policies have a 20-day elimination period (30 days in TN), a reflection of the fact that Medicare typically covers a nursing facility’s cost for that period – and may also pay up to $161 per day in 2016 for days 21-100.

For that reason, owning a Short-Term Care Insurance policy with its financial payout could help a patient make up the difference for what Medicare does not cover during days 21 to 100. Right up to the 360th day of care, it also provides full coverage for the period a#er 100 days despite not directly coordinating with Medicare.

Many STCI policies provide coverage for any level of care, including custodial care. And unlike the limitations included in some LTCI plans, serious conditions such as Alzheimer’s or Parkinson’s diseases receive full benefits and are covered in many STCI policies just like any other illness.

The Differences Between STCI and LTCI

A simple price point difference may be the most staggering contrast between Short-Term Care Insurance and traditional LTCI coverage, especially when customers begin to do their homework. The affordability offered by STCI policies, versus the rising costs of LTCI coverage, also makes STCI an appealing product for agents who want to provide a viable option to clients who have cost or access obstacles.

STCI’s more simplified health underwriting is also good news for applicants who may have had their LTCI or other insurance applications denied because of pre-existing health conditions or their age.

An especially a"ractive benefit is the fact that most STCI plans offer the same premium pricing for both male and female policyholders, versus LTCI premiums that are traditionally 20% to 40% more for female purchasers. 9

And the 20-day elimination period (30 days in TN) for STCI means that benefits start far more quickly than is the routine under an LTCI claim, where a 90-day deductible is standard. 10

9 “Long-Term Care Coverage Costlier for Women,” Kiplinger, March 2013



The STCI Selling Process

As you know, making an educated guess about their future health is a tough prospect for most customers. But with the help of a caring and empathetic agent, the process required to buy a Short-Term Care Insurance policy can be a smooth and, in many cases, fast turnaround, with much less of a financial shock experienced by those shopping for LTCI coverage.

STCI can also be a much easier product to sell than complicated LTCI policies, as many Americans will immediately resonate with the lower costs and the relative simplicity of the application process.

First, your customer must make a selection of the benefit period they’d like the Bankers Fidelity STCI policy to cover – either 180 or 360 days with a 20-day (30-day in Tennessee) elimination period applied to either option. This choice will be the biggest factor in determining premium cost.

It may be prudent to mention to a client that approximately half (49%) of LTCI claims end in a year or less 11 and that STCI represents a more realistic reflection of the health care experience. While the average length of stay for a patient under the age of 85 in a nursing home is 411 days, 12 67% of people discharged from a nursing home actually stayed for three months or less. 13

Perhaps the most appealing aspect of a Short-Term Care Insurance plan is the potential for a full restoration of benefits. Following confinement in a nursing home, and a#er being confinement-free for six consecutive months, 100% of any benefits paid are reinstated. 14

Customers still need to be aware of the 20-day (30 in TN) elimination period, the time during which a Medicare-approved stay will typically cover a facility’s costs. Short-Term Care Insurance can take over where Medicare stops and provide full coverage up until the 360th day of care.

Conclusion

Benefits such as these have led to an increased awareness and interest in STCI among seniors, and the timing couldn’t be be"er. At a time when many older Americans lack a plan to protect themselves from the financial hardship a#er an accident or illness requiring nursing home care, your customers need to know about valuable options available to them.

With a Bankers Fidelity Short-Term Care Insurance policy, your customers get the coverage they need for a price they can afford. To learn more about Bankers Fidelity Short-Term Care Insurance, and how to make it available to your clients today, visit bflic.com now.


12 2004 National Nursing Home Survey prepared by Division of Health Care Statistics, Long-Term Care Statistics Branch; June 2008

13 AARP, Nursing Home Fact Sheet, Feb. 2001

14 180-day restoration is not available in all states and is limited in some states


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BFL MKT WP 5126 2016 White Paper copy