The statistics are sobering and indisputable: individuals age 65 or older have a 40 percent chance of entering a nursing home sometime during their lives. The average annual cost of a nursing home stay is $50,000, and even higher in some metropolitan areas.
Specialized care can cost as much as $200,000 annually. Are your customers prepared? Here are eight ways you can urge people to protect their assets and their families with a long term care insurance policy.
1. Personal financial planning
Discussing the need for long term care insurance is a natural adjunct to developing a comprehensive financial plan. “I get the most satisfaction and fulfillment in dealing with individuals,” says Paul F. Love, CLTC, CLU, ChFC of Foster Soltoff & Love, Ltd. in Bethesda, Md. Love has been helping his customers develop financial plans since 1972.
“I don’t look at one individual area for my clients; we look at everything: life and disability insurance, estate planning, legal documents like wills and trusts, investments, etc.,” he says. “When my customers are in a pre-retirement situation, we discuss whether they’re prepared, and determine whether they can retire comfortably. Talking about LTCI is a natural part of that discussion and our review process.”
2. Contingency planning
“We view the possibility of long term care as a need area and a risk area,” says Jennifer White, CSA, CLTC, LTC case consultant for Commonwealth Financial Network in Waltham, Mass.
White has been with the company for six years, consulting its advisors about long term care products and case design, and providing guidance on issues such as home care, assisted living, nursing homes and taxes.
“We emphasize putting plans in place for our customers rather than selling products; our job is to minimize risk for our clients’ portfolios. Ideally, they need to understand the options and make decisions when they’re young and healthy enough to make those decisions,” White says. “The reason people don’t plan for long term care is that usually they believe someone else will pay for it. The advisor needs to raise that issue with the client and ask, ‘Who do you think will pay for the care if you need it? It’s either going to be you, or your insurance policy.’”
Love asks his customers if they have planned for the significant possibility of needing long term care and if they have a plan in place to pay those additional expenses. “I remind them that even if you’re incapacitated, your mortgage doesn’t go away,” Love says.
3. Executive benefits
Long term care insurance is increasingly an important benefit that organizations can offer to attract and retain key employees. Love puts LTCI policies in place for corporate executives and their spouses, often as part of a comprehensive retirement plan.
“One of the nice things about utilizing a long term care insurance policy for executive compensation is that the company can be discriminatory and only pay for the policy for its owners and key employees if it wishes to,” Love says. “The expense is usually tax-deductible for the organization, and the premiums are not included in the income of the employee. Neither are any benefits that might be received if claims are made against the policy in the future.”
4. Group benefits
On the flip side, companies are increasingly offering LTCI as a voluntary benefit for all of its employees, with discounted premiums for the entire group.
“When we’re offering the benefit company-wide, we generally present the LTCI policy as part of a retirement planning seminar,” Love says. “We have a substantial 401K practice, and when we’re talking about retirement saving, it’s a perfect time to discuss long term care insurance. One of the real benefits for, say, a 30-year-old employee is that we can make the same discounts available for his or her parents, family members or even grandparents who want to purchase a policy.”
5. Personal experience
There’s nothing like immediate knowledge of a problem to illuminate the need for a solution.