A Tale of Three Sisters
By Joelyn Brickner
Asset Marketing Systems
July 28, 2014 — San Diego, California — Hollywood has discovered the remaking of classic fairy tales is both popular and profitable. From new adaptations of Snow White (Mirror, Mirror and Snow White and the Huntsman), Rapunzel (Tangled), and most recently the Sleeping Beauty story told from the perspective of the antagonist, Maleficent, box office numbers show tales of the Brothers Grimm and Hans Christian Anderson live on in people’s hearts. We still enjoy fairy tales long after childhood, especially if everyone lives happily ever after.
Jeff Stemler, Asset’s Executive Vice President, Sales & Recruiting took a similar approach – a modern day fairy tale – to illustrate how producers and advisors can help their clients find the means to pay for long-term-care insurance. I thought his story should be shared.
It all begins in a kingdom where three lovely princesses (triplets actually) live. Mia, Lindsay and Breta have all reached the age of 71 in reasonably good health (although they’re prone to sharing jokes about minor aches and pains and constantly misplacing their bifocals and crowns). Being prudent as well as beautiful, the three women had all made good investment choices over the years, knowing that they would not be able to reign over the kingdom forever. They realized they had never addressed protecting themselves from the costs of long term care.
Upon reviewing the expense of traditional premium based long-term care insurance, however, Princess Mia exclaimed, “It’s too expensive and the price keeps going up!” Princess Lindsay nodded dolefully, adding “And if we don’t use it we will have wasted our money!” Princess Breta, throwing her hands in the air, lamented, “But my sisters, this means we are 100 percent self-insured. Isn’t there anything we can do to protect ourselves and our retirement investments?”
Days passed with no solution between them until one bright morning a handsome prince from the land of Asset stopped by the castle and the triplets invited him in for a cup of coffee. After discussing with them the local news, the rising and falling price of gold, and the trouble that dragons can cause in dry season, the prince announced, “Princesses Mia, Lindsay and Breta, word has come my way about your lack of long term care protection, so I searched the land far and wide for a solution to your predicament. In my search I met a financial wizard who is willing to help you, but I must first ask you to help me identify the assets you would use to cover long term care expenses should the need ever arise.”
Among themselves, the princesses whispered together for a minute or two, then nodding in agreement, turned once again to the prince. Princess Mia spoke first. “My sisters and I each have $100,000 set aside for ‘just in case expenses.’” Princess Lindsay added, “Mia and I will entrust you with our money under three conditions. “One - if we change our minds we can get our money back. Two - we want our principal protected. And three, we would like a guaranteed rate of return.”
Princess Breta said “What I want is the maximum coverage possible.”
The prince gathered the information and found that each of the princesses had her funds invested differently. After recording and confirming this information, he gave them his cell phone number, tucked his laptop into his saddlebag, mounted his white steed and with a flourish of his princely cap, was off to see the wizard on their behalf.
Several hours later, the prince arrived at the wizard’s castle near the sea, where he found him busily working on several other life and long term care cases. The prince waited patiently until the smoke cleared before presenting the wizard with the three new cases.
The good wizard was happy to oblige. Princess Mia’s $100,000 had been invested in a CD paying a measly 1% percent interest annually. With a twitch of his beard and a wave of his wand the wizard produced a life policy that produced a total tax-free benefit of $150,554 for long term care expenses, plus Mia’s cash would grow, and if she didn’t use all of the proceeds, the remainder would go tax-free to her sisters. Mia was very pleased.
Princess Lindsay’s $100,000 was in an IRA, from which she was now being forced to take required minimum distributions, though she didn’t need the cash. This was a toughie. The wizard had to come up with a unique solution since life insurance was not a permitted asset inside an IRA. After tapping his forehead and mumbling a financial incantation under his breath, his face brightened. With another wave of his wand, he created a bit of powerful magic pulled two policies together – an annuity that was in the IRA and a life policy that received 20 years of distributions from the annuity.
Lindsay was very pleased because now she had an initial benefit of $148,838, could get her total premium back if she changed her mind and her money would continue to grow.
Princess Breta had an old $100,000 annuity that she was not relying on for income. The wizard, having seen this dilemma before, for a third time waved his magic wand and “annuitized” the annuity and with the income produced a policy with a total long term care benefit of $187,934.
The royal sisters where so appreciative of what the prince had done for them, they told all of their friends in neighboring kingdoms. As a result, the prince became the “KING of ASSET BASED LTC.
Now you might be asking yourself, “How can this story generate more client interest in buying long term care insurance?” Asset truly helps our producers and advisors find ways to protect their clients’ retirement investments with risk management vehicles designed to work within their current portfolios. It may sound like magic, be we can assure you that it’s not. When you have questions about annuities, life insurance or long term care, give the wizards at Asset a call and we’ll show you how the having the right policies in place can help your clients live “happily ever after.”