It’s hard enough to get people to sit down and plan for their retirement. It’s understandable, then, that the last thing financial planners want to do is talk about long term care planning. But that’s unfortunate. Long Term Care Insurance (LTCI) is a powerful tool, and it can help clients fully enjoy (and secure) their golden years.
But we get it. Clients (and, sometimes, their financial advisors) would rather focus on the positives of long term financial planning: ensuring you have enough for your retirement, being able to take that trip to Italy, or saving to buy a cottage next to the water–that kind of thing.
The truth is that, if you’re a financial planner, Long Term Care Insurance is critical to ensuring the future your clients want. After all, over 70% of people over the age of 65 will need long term care at some point. LTCI can help cushion them from a devastating financial blow.
For financial planners, this makes Long Term Care Insurance a vital piece of the retirement puzzle. Here’s how you can bring up the topic with your clients.
Give Your Clients the Option to Hear About it
In order for your clients to make an informed decision, they have to know that Long Term Care Insurance exists! Unfortunately, many people don’t have a depth of knowledge on the topic when they show up to your doors–many people may not even know that LTCI exists.
Think about it like this: what good are all those retirement funds if your clients use them to pay for healthcare instead? Do they know which asset to liquidate first to pay for their care?
Which means it’s up to you, the financial planner, to approach the topic of LTCI. After all, your clients are coming to you for a plan. They want their financial future to be secured. A client who doesn’t have LTCI is at the mercy of fate–that future is unsecured. They’re winging it, essentially. That’s because healthcare issues can occur unexpectedly and throw all those other long-term plans into chaos–unless Long Term Care Insurance is there to cushion the blow.
So, how do you start those conversations? Well, you could always try something like: “Modern medicine is helping us live longer, but not necessarily better. Long term care costs have grown significantly, and it’s a good idea to be prepared for those.” It’s okay to have a scripted and rehearsed conversation started ready to go!
Examine Your Own Bias
There are plenty of long term financial planners that view LTCI with a bit of apprehension. Why this bias develops isn’t clear, but it’s prudent to re-examine those biases. After all, LTCI is a tool–like any other financial investment. When chosen well and priced appropriately, Long Term Care Insurance can deliver a great deal of good for your clients.
According to our experiences, here are some of the most common biases worth re-examining:
- LTCI is too expensive: We think what people usually mean by this is that even though they pay a premium, they may (or may not) end up using their LTCI. But this is basically what insurance is! The expense of a Long Term Care Insurance plan can be somewhat tailored based on what you think you’ll need (and what your client can afford). Plus, LTCI can help your client handle rapidly rising inflation in the healthcare industry.
- LTCI isn’t worth it because people may never use it: In a way, we’re always happy when a client doesn’t use their Long Term Care Insurance–it means they didn’t need long term care! Unfortunately, again, up to 70% of people age 65 and older will need long term care. True, when you need your LTCI can be very unpredictable. LTCI is not a gamble any more than your car insurance or disability insurance is a gamble. According to insurance company statistics, over $13 billion in LTCI claims were paid out in 2022, which is $1 billion more than in 2021. Even if you never make a claim, your policy provides protection and peace of mind.
- LTCI isn’t sophisticated enough for modern clients: Clients have come to depend on an ever-diversifying array of financial products that seem absolutely tailored to their needs. Long Term Care Insurance has kept up with these trends: there are a wide variety of LTCI plans and plan types that can be tailored for clients–no matter that client’s lifestyle or needs. It’s all about finding the right plan for the right client.
Examining these biases–and figuring out whether they stand up to scrutiny–can help you better serve your clients in the long run.
LTCI Has Come a Long Way
Many people have a certain idea about Long Term Care Insurance. They think they know what it looks like and what it offers (this goes both for financial planners and their clients). But it’s important to note that today’s LTCI options have come a long way in offering clients customizability and modern products. For example:
- Stand-Alone Traditional LTCI carriers most offer lifetime premium payments, but there are a few who came out with a single pay and 10 pay option. Clients can choose which one fits their lifestyle and long term goals the best.
- Hybrid plans combine life insurance with a LTCI rider to cover clients no matter what happens. These policies offer a guaranteed payout (LTCI benefits to the policyholder or a death benefit to heirs if they never use their benefits).
- Hybrid plans are available in abundant options, giving clients a significant amount of flexibility and customizability. Plus, Hybrid premiums are guaranteed (they will never increase or change).
Newer, modern LTCI plans allow clients to be more selective and intentional about the insurance they receive and fold into their financial plans.
Start by Keeping it Simple
Long Term Care Insurance is something that, especially for clients, can get very complex very quickly. That’s why, in your early conversations with clients, it makes sense to simply focus on the need to plan for possible (and perhaps likely) long term care costs. In other words, during that first meeting, you just need to discuss the possibility of Long Term Care Insurance–not agree on a fully-fleshed-out plan.
You can get into these nitty-gritty details during later meetings. But for now, the goal is to simply discuss the need for LTCI. Once the need is established, you’ll be able to successfully move the conversation forward.
Have Questions About LTCI? Talk to an Expert
The best way to learn more about Long Term Care Insurance is simple: talk to an expert. With decades of service assisting our clients, the team at Gordon Associates knows what people want–and don’t want–when it comes to LTCI. Which means we can help you get ready and be prepared for whatever your clients need and ask.
It’s time to leave the stigma behind–and do what really works for your clients. Contact Gordon Associates today to learn more.
To help determine if long-term care (LTC) insurance is right for you, we are offering a FREE informational guide. This is a comprehensive booklet that will answer many of your questions about LTC and assist you with your health care planning.
To help determine if long-term care (LTC) insurance is right for you, we are offering a FREE informational guide. This is a comprehensive booklet that will answer many of your questions about tax breaks and incentives for LTCI for federal and state taxes.