Missed Opportunities: Addressing Long-Term Care Insurance Needs

long-term-care-insuranceThe irony of long-term care insurance is that most people (consumers, employers, and advisors) believe that a plan for long-term care is essential to retirement readiness. Yet, in practice, no one wants to talk about it. Consumers wish the advisor would bring up the subject, but won’t bring it up themselves. Advisors recognize the risk to retirement assets without long-term care insurance, but don’t want to discuss it. Employers understand how important long-term care insurance is to employee’s financial wellness but have difficulties finding an advisor working in this market.

According to a 2015 Lincoln Financial Group and Hanover Research project, 40 percent of pre-retirees seek counsel from a financial professional but fail to initiate a conversation about the very issues of most concern, like planning for long-term care. Despite the concern, many are misinformed about basic long-term care facts. Consumers underestimate the actual cost of care yet expect a combination of personal savings, health insurance, and Medicare to cover the costs.

Interestingly, clients give significantly higher satisfaction scores when advisors talk to clients about the continuum of financial planning topics including long-term care and caring for loved ones with parkinsons. Advisors may give higher priority to investment risk leaving unaddressed the two retirement risks most difficult to manage, health care and long-term care expenses. Most advisors write less than five LTCi policies each year. The product is perceived to be a difficult sale for several reasons, 1) advisor dissatisfaction with product options 2) perception of unaffordable premiums and 3) requires additional knowledge and support resources. These objections fade away for advisors who collaborate with a managing agency with expertise in long-term care insurance.

Managing agencies have access to a variety of carriers, products, and support. All to easily, financial professionals and consumers can recall some of the horrors of older long-term care policies. Older products were very specific about where care could be provided to be considered eligible for reimbursement. Covered care may be restricted to specific locations, often only nursing homes. The limitation contributed to distrust of the product and the carriers that underwrote the policies. Most long-term care, 70 percent, is now delivered at home and today’s long-term care products are likely to provide coverage that includes home health care, assisted living care, and nursing home care. Since about 2010, products are priced to reduce the possibility of future premium increases, in fact, actuarial studies predict less than 10 percent of current products would ever require a premium increase.

Advisors and consumers sometimes balk at the affordability of long-term care insurance. In fact, according to AHIP, between 1986 and 2014, beneficiaries of long-term care insurance received at least $2.78 in benefits for each $1 paid in premium. Policies purchased more recently, 2007 through 2014 paid $5.02 in benefits for every $1.00 of premium paid.

Some advisors point to a lack of confidence with long-term care terminology and products as a deterrent to selling long-term care insurance. A managing agency fills the gap for the advisor, providing guidance about product, optional features, and support for client meetings. Many agencies will help an advisor enter new markets, including the multi-life market. Employers have a growing interest in offering long-term care benefits to employees; and employees respond to worksite marketing especially when their financial advisor sidesteps long-term care insurance.

10,000 baby boomers retire every day. 70 percent will require some form of long-term care. Retirement assets need a protection plan, long-term care insurance. Advisors estimate retirement assets will be reduced two to three times faster if long-term care is necessary and the client is without long-term care insurance. Financial professionals relying on support and expertise from a managing agency provide clients the comprehensive planning crucial to a secure retirement while addressing financial anxieties and increasing client satisfaction.

Brokers Central has all the resources you might need to effectively address with your clients the risk of long-term care expenses. Our first step will be to listen to your goals for the client. Always putting your relationship with the client first, we will support your LTCi efforts, including preparation for and participation in sales presentations and client meetings. When it comes to easing the fears of your clients it’s never too soon or too late to address the need for long-term care insurance. Call Brokers Central today at 845-495-5000 to get started. Also download our LTCi client handout.

As the Founding President of Brokers Central, Yoel Bodek has an innate understanding of how financial products work together to solve clients’ business, financial security and wealth accumulation goals. View Yoel’s Bio. Email Yoel.