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DPL’s Latest Commission-Free Annuity Has LTC Features

The Midland National Capital Income annuity is aimed at helping clients plan for unexpected health events that impact their ability to perform daily activities, such as bathing, dressing or eating.

DPL Financial Partners continues to expand its commission-free insurance and annuity products for registered investment advisors, with the introduction of a fixed index annuity that doubles a client’s income once the policyholder can no longer perform certain daily activities. The new annuity, being launched with Midland National Life Insurance Company, will be available in two weeks.

Independent advisors who use DPL can offer their retired clients, at a minimum $20,000 premium, the commission-free Midland National Capital Income annuity, which will double their income once they can no longer perform two of six activities of daily living, including bathing, continence, dressing, eating, toileting, and transferring in and out of beds and chairs.

“Health problems can dramatically impact a retiree’s expenses,” said David Lau, founder and CEO of DPL, an insurance network for RIAs, in a statement. “We wanted to create a first-of-its-kind product that provides additional income should a client experience an unexpected health event that impacts their ability to care for themselves.”

The health-activated income multiplier feature, or ADL benefit rider, doubles the income for five years, helping to cover increased costs from an unexpected health event. Before and after that five year period, the client will use Capital Income as a regular fixed index annuity where they choose a lifetime income stream that fits their lifestyle.  

The ADL rider gives the annuity the feel of long-term care insurance, although the company makes a point to say it is not LTC insurance. The distinction remains that LTC pays against medical expenses, whereas the annuity pays the beneficiary directly. In addition, there is no underwriting, so there is a waiting period of three years before the client can initiate the double income.

Midland National, another one of DPL’s carriers, designed the product around three elements: growth and protection of client assets, guaranteed income stream, and a health activated income multiplier, according to Jill Esser, vice president of product development at Midland National.

Midland has also wanted to enter the fee-only advisor space. Rob TesKolste, the president of Sammons Financial Group, a member company of Midland, said the company had been looking to enter the RIA space when it began talking to DPL about partnering to meet an unmet need in the space.

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