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Life Health > Long-Term Care Planning

Can you afford the risk?

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Note: This column is a continuation of the information I shared in last month?? 1/2 s column. To read that column, please click here.

Q. I work with a wealthy clientele and when I mention LTCI insurance to them, many of them reply that they have plenty of money and can afford to self-insure the risk. Can you suggest some ways to counter that objection?
A. This is a common objection that all of us hear periodically. Maybe the person does have a lot of money, but it may still make sense for them to buy the insurance. An expert in addressing objections is Deb Newman, president of Newman Long Term Care, a brokerage agency in Minnesota and one of the ten people named to the Senior Market Advisor LTCI Power List. Deb recommends using stories to counter objections, so that story telling answers the objection and prevents a confrontational conversation. This helps create a comfortable environment in which the client can better understand your point of view.

Here are two stories Deb uses when she hears the objection that “I can self-insure.” She starts the conversation by saying, “That reminds me of a story…”

STORY 1 – “An agent had a very analytical male client, and she could not get him to feel the need to purchase LTCI. She got out her own checkbook and placed it in front of him. Since the client and his wife had been paying $5,100 per month for his mother-in-law’s nursing home care, the agent asked, “Would you write a check out for $5,100?” Her client closed his eyes and said, “Yeah, I get it.” I suspect that he didn’t want to burden his own kids, let alone pay this much money out-of-pocket. We need to help people feel the need for LTC planning in the same way they buy auto insurance or homeowners insurance. They’re transferring the risk in those cases. Why wouldn’t they transfer the risk in a LTC situation?”

STORY 2 – “A single man had just over a million dollars. His trust advisor had actually advised him to buy LTCI, but when they ran all the numbers and the client could see that he really didn’t have to have it, he put it off. The trust advisor tried to convince his client to buy five more times. After this client took a long vacation in California, the advisor called me to share his story. This now 68- year-old man locked himself out of his condo and decided to climb up to his balcony to gain access. He fell off the balcony, was hospitalized and then needed home care. He was alone in California and didn’t know anyone. He had a home health care agency come in to bathe him, cook and clean and administer physical therapy. This client was disappointed that his Medicare supplement wouldn’t pay for his home care. He originally thought that he didn’t need LTCI because he had plenty of money. But when it actually came time to pay for some needed care, he wanted insurance to pay for it.

“I don’t care how much money they’ve got. People are used to insurance paying for this type of risk. That’s what we’ve got to help them understand. It’s more a matter of how painful it is to write that check out of your own checkbook when you actually need care. People with a considerable amount of wealth arrived at their current financial position by being very careful about their money and transferring the risk.”

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