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Securing your client's retirement future from the cost of long-term care - Part I

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How will the economic downturn affect the long-term care insurance business?

Recently, advisors have been asking this exact question, as have most people regardless of their profession. Many can’t help but recall the 1991 national recession and how it affected business.

However, if we do see similar business conditions to 1991 there is a strong chance it may actually enhance the LTCI business. Why? Because people will be in a “circle the wagons” frame of mind – and insurance protection products like LTCI can help alleviate those fears.

Much of today’s consumer climate is driven by fear instead of the true underlying fundamentals. The emerging national viewpoint – that everything is going south quickly – is not supported by hard economic facts. Because of this, there is no doubt that many people will stay employed and have the ability to afford LTCI premiums.

Compounding the fear factor is the reality that both the stock market and home values fell this year. According to an article in the Wall Street Journal “the double dip, affecting asset owners of every age bracket, is unprecedented in recent decades.” People who just a few months ago assumed (and were told by many of their trusted advisors) they could comfortably self-insure their long-term care needs suddenly feel very vulnerable.

Two other factors are increasing awareness of long-term care costs as well. First, the political campaign is generating awareness of the extreme fiscal crisis upon us with Social Security, Medicare and Medicaid. An article by Terry Savage in the Chicago Sun-Times discusses the problem with the current government’s long-term care financing, in which nursing homes are being reimbursed less by state Medicaid programs while still experiencing increased costs due to more regulations. The result? More facilities are going out of business leaving less room for Medicaid patients. As Terry Savage states in the article: “And the baby boomers haven’t even started retiring yet!”

The second issue is the looming threat of Alzheimer’s. The Alzheimer’s Association just released their 2008 Alzheimer’s Disease Facts and Figures, with the eye-popping headline: “10 Million Baby Boomers will develop Alzheimer’s in their lifetime.”

Being aware of the information above should make it easier to begin the discussion of long-term care insurance. However, it is advisable not to frame the conversation around fear. Instead, for those clients who have family members it might be good to remind them how fortunate they are to have family to support them in times of need. That conversation can then bridge into a long-term care insurance discussion.

Stay tuned to for more from Tom Riekse, Jr. about selling long-term care insurance.

Tom Riekse, Jr., CEBS is a managing principal at LTCI Partners LLC, Libertyville, Ill. For more information, visit or call 800.245.8108.


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