“I am not in the long term care insurance market” is a refrain that I hear from a lot of producers in the financial planning community when I describe myself as an LTC insurance specialist. An explanation usually follows that they either work within the affluent market, where all of their clients can self-insure, or that their clients are too young for long term care insurance.
Then you hear the real explanations: “Long term care insurance is too confusing.” “I don’t want to waste my time on it.” “I prefer to focus on group business, investments or life insurance.”
Admittedly, there are a lot of options with LTC insurance that can be tricky, and there is less compensation in selling it compared to some other lines of business. However, you are doing yourself and your clients a disservice if you are not speaking to them about addressing their own potential LTC needs or those of their parents.
Let’s assume for argument’s sake (although I would disagree with this analysis) that you cannot find any way for LTC insurance to ever add significantly to your bottom line, given the complexity of the product and the commissions involved. I would argue that it still makes sense to be in the business of providing advice about this coverage. Here’s why:
Can every one of your clients self- insure? If every one of your clients has a net worth in excess of $10 million, then I would not argue with you about ignoring LTC insurance, since they can self-insure. (Although many of our clients with those kinds of assets still see the value in passing this risk off to an insurance carrier.) While many planners strive to work only with clients with a high net worth, it’s inevitable that you have some clients who do not have those kinds of assets.
These clients may be the friends or families of your best clients. While they may have a lower net worth, they are important to your best clients, and thus just as important to you.
Then, too, you may have your own friends and family as clients who have asset levels that don’t allow them to comfortably self-insure. Likewise, you probably have clients with whom you worked when you just entered the business who may not have the financial resources of your best clients. But you are loyal to them, since they had faith in you when you needed them.
Take another honest look at your clientele. I would be surprised if you did not find a lot of clients who would be able to pay the premiums for LTC insurance but would not be able to pay for the cost of long term care. Recommending self-insurance or just ignoring the topic altogether is bad advice for these clients. If giving out bad advice isn’t reason enough to discuss LTC insurance, the potential that these clients (or their children) may look to sue you when long term care is needed should convince you that it’s an area you want and need to address in your practice.
But my clients are too young to discuss LTC insurance. Given the aging of America, you will find many of your young clients may have as many or even more parents than they do children. While every fact-finding interview I have ever seen asks the client if they have any children, very rarely do I see one that asks about the client’s parents. Certainly, children are (among other things) a financial obligation and have to be taken into account when making recommendations to a client. But is the client also responsible for any of their parents’ needs? Just ask someone who is helping a parent or in-law with a long term care need on a day-to-day basis if it is a financial obligation. Then be prepared for an hour-long conversation about the enormous amount of time and money involved.
Married clients in their 30s or 40s will most likely have multiple parents in their 50s, 60s or 70s. If you have 2 parents and 2 in-laws over the age of 65, the odds are extremely high that one of them will need long term care for an extended time. If a parent who doesn’t have a lot of assets needs care, it is almost certain that the rest of the family (spouse, siblings and the healthy parent) will turn to the most successful child in the family for help.
If a client purchased coverage from another planner for his parents and that policy provided the funds needed for the parents to stay in their own home, whom do you think this young client will get in touch with the next time he or she wants to do more insurance business? By not talking about LTC insurance for their parents, you may allow your competition in the door.
Most financial planners strive to forge long-lasting relationships with their clients. Nothing cements a relationship as much as having an LTC policy deliver on its promise to keep your client’s parents in their own home without having to worry about money.
If you can’t focus on LTC insurance, therefore, work with someone who will. LTC insurance is something you need to be able to discuss with your clients. Yes, some of them can self-insure, and others will be young enough so other priorities should be addressed first. However, it’s bad business not to be able to help your clients address the potential costs of needing long term care. If you are not prepared to invest the time needed to be proficient with this coverage, then look into working with someone to whom you can refer your clients.