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A useful terminology guide for LTCI

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Q. I want to pursue financial planners as referral sources. What key words should I be using when I talk to them, and what information would it be helpful for me to provide to show them that I am a credible resource for their referrals?

A. It’s exciting that LTC insurance, for so long a niche product, is now emerging as an essential part of financial planning. For advice on how to successfully recruit financial planners as referral sources, I turned to Randy Bradley, a management consultant to the financial services industry. He is currently working with Penn Treaty to develop a financial channel program.

“To work well together, it’s important that financial advisors and agents develop a common platform by learning each other’s language and key information,” Randy explained. “Knowing the so-called ‘buzzwords’ and why they’re important is a great starting place. These are more than little phrases — they are the shared assumptions in the financial advisors’ and LTC agents’ lives.”

Here are the key words that LTCi agents need to know:

  • Wealth management platform — A Broker-Dealer’s (or bank’s) financial management toolset designed to provide advisors with standard methodologies and strategies for the management of a client’s portfolio.
  • Accumulation phase vs. distribution phase — The part of life when a client is concentrating on accumulating assets vs. the time when the client will need those assets distributed.
  • The 4 percent rule — The amount of total assets under management that advisors will set aside for an annual payment to a client and still retain principal.
  • Commission vs. fees — Many clients pay their registered independent advisor an annual fee which is a percentage of assets under management, rather than paying commissions on trades.
  • Average expected rate of return — A rate the advisor’s clients may expect their assets to earn when fully invested in equities. A figure that’s frequently used is a seven percent annual rate of return.

What information should the LTC agent be discussing with the financial planner? Here is Randy’s list of buzzwords and suggested definitions.

  • Medigap policies — Health insurance sold by private insurance companies to fill the “gaps” in original Medicare plan coverage. Lack of coverage can eat away assets.
  • Nursing home vs. assisted living vs. in-home skilled nurse visit vs. in-home aide — In descending order of cost, these are the four different levels of LTC.
  • Average costs of LTC by region — Costs vary widely. According to a study by the AARP, the average monthly cost of a nursing home in California was $6,306. In South Carolina, average monthly nursing home cost was $4,867.
  • Morbidity — The probability of the health event occurring. It measures the frequency and severity of the sicknesses and accidents that result in a need for LTC.

As boomers age, the clients who preserve the greatest amount of wealth may be those whose advisors converged in providing financial solutions to meet that stage in life.

Don’t miss Margie Barrie at Senior Market Advisor Expo, Aug. 20-22. Visit for details.


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