Long Term Care Planning Must Include More Than LTC Insurance Discussions

Long term care insurance has captured the attention of many consumers. Hardly a week goes by without articles, both pro and con, about the types of coverage available or companies offering products. As agents, it is very important that we discuss with consumers the costs associated with long-term custodial needs and help them evaluate the adequacy of their current resources to meet those needs. Often, when a shortage of resources exists, LTC insurance is appropriate and a review of coverage types, amounts of coverage and other riders offered is in order. Where we fall short is in assuming our job is done when the policy sale is complete.

Consumers need long term care planning! LTC insurance may be a part of LTC planning, but selling a long term care policy is not long term care planning. As insurance professionals, we spend so much time reviewing the financial impact on the beneficiaries, that we often overlook the emotional impact and information void that happens when a loved one requires long term care. This kind of short-sighted thinking throws away an important opportunity to serve the consumer and build your insurance practice.

Offering LTC insurance as a resource to be used in providing LTC planning is an important practice building tool. You have experienced the panicked and emotional calls when a client needs to make claim on any of his or her policies, whether life, disability or LTC. More than anyone, you know that missing documents or documents that were never updated can cause serious distress and financial hardship. You know because you are called upon to help sort out the dilemma and to help replace missing documents. You also know that, frequently, all you can do is offer verbal consolation because the beneficiary designations were old and wrong, something you can do nothing about at the time of need.

LTC insurance products provide new resources but do nothing to provide emotional comfort, document location and lifestyle management to the families. If mom needs to go to a nursing home, will the children have the power of attorney documents necessary to manage the house, sell the car or deal with other financial issues? They may need access to deeds and titles. Moms birth certificate (and marriage certificate) is essential in applying for Medicare and other Social Security benefits. Dads military discharge papers are important if you want a U.S. flag to drape his coffin.

LTC planning counseling will help you assist a client in capturing important documents while discerning what planning still needs to be accomplished. It is a process that is a natural lead-in to other product sales. This strategy does not require you to embrace a comprehensive financial planning role, but instead, gives you a valuable tool to offer the LTC insurance consumer.

Here are several steps that create a powerful opportunity for you to develop trust and add value to your client relationships:

1. Create a checklist of important documents that are integral to your clients financial and family life. Help the client identify and obtain critical, but missing, documents, such as a will or durable power of attorney or health care proxy. Review existing insurance policies and investments for current beneficiary designations. Your clients will appreciate your efforts in helping them achieve a measure of assurance that their beneficiaries and caregivers will have both the resources and information to carry out their wishes.

Your checklist should include the following broad document categories:

Insurance (cover pages of all documents listing account numbers).

Savings and Investments (numbers for all accounts).

Property (deeds, titles, auto loans, mortgage documents).

Retirement Plan (all retirement accounts, personal and corporate).

Personal Data (passports, Social Security numbers, professional contact numbers, birth certificates).

2. Introduce the “Access Administrator” concept. You can serve as the access administrator for your clients, maintaining one file that would include copies of all of your clients important documents and critical contact information. The client can further designate individuals who would have access to this file by making one call (to you) to access all these important documents in one location. This helps your clients bridge the transfer of information from one generation to the next. At the moment of crisis, your clients children will come to you for their parents file and look to you for advice and assistance.

Working within a framework of LTC planning guidelines with your clients is a sincere expression of concern and provides value, whether the consumer purchases insurance or not. Imagine, one file, in one location, accessible with one call. Do your clients deserve anything less? Make sure they call you.

Mark Kaizerman, CPA, CFP, ChFC, and CLTC, is the author of “Beneficiary Directory: Your Personal System to Organize Your Important Documents and Guide Your Beneficiaries.” He can be reached at mark@beneficiarydirectory.com.


Reproduced from National Underwriter Edition, January 27, 2005. Copyright 2005 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.