Q. Given the economic crisis, many baby boomers believe they will be unable to pay for long term care insurance if they ever needed it and are using their savings to pay off day-to-day expenses. When it comes to long term care, many say ‘I just can’t afford it right now.’ With the likelihood that most boomers will need long term care at some point in their lives, what can I do to convince my clients that paying for long term care insurance, especially right now, is just as important as paying off day-to-day expenses?

A. Perceived affordability of long-term care insurance (LTCI) has always been an issue, even during good economic times. With the economy now in a recession, people are going to scrutinize every expense — including LTCI — to see if it is essential.

There is also understandable mistrust of the financial services world and insurers right now. Many boomers have always had suspicions of the sales approaches and promises that the previous generation took to heart. People aren’t eager to put their money in places that aren’t federally insured.

Therefore, the wrong approach in this environment is to come in with a carrier product brochure and illustration on the first meeting and say something like this: “Hey, there is a chance you’ll go to a nursing home someday and this insurance will help pay for that. Oh, the premium is $3,000 per year and if you don’t use it you’ll get nothing back.”

Also, if someone doesn’t have current income because they have been laid off, they probably won’t be an LTCI buyer for obvious reasons. There does need to be some knowledge of the prospect’s financial condition before discussions can start. If proposed premiums are going to be greater than 5 percent of annual income, the recommended plan being quoted is too expensive.

Instead, a better idea might be to look at two other approaches in discussing LTCI; as a family protection plan and as an adjunct to a new savings plan.

First, long-term care is always a family issue and one that needs to be discussed regardless of how the problem is solved. The solution might be LTCI, or it might not be. However, by talking about the impact long-term care will have on the family, you are then moving the conversation from trying to sell a product, to trying to plan for something that will impact their lives and the lives of their families. And many clients will pay plenty to protect their family. For boomers, those who have life insurance are better candidates than those who don’t, because of the already-demonstrated commitment to the family. Others who they may know and respect that have purchased LTCI are reinforcers to the decision.

Long-term care can also be seen as a smart addition to a savings program. The greatest threat to someone’s retirement portfolio is a long-term care incident, and LTCI can help act as a “firewall” to that portfolio. The good news with this approach is that savings rates recently have increased while discretionary spending on luxury items has decreased. The use of financial calculators showing the impact of buying LTCI, now as opposed to later can be very effective.

Finally, make sure to quote a reasonable benefit that will pay for 2 to 3 years of quality care. The difference in a premium between “lifetime” benefits is considerable. Perhaps buying a policy with the ability to purchase additional benefits when times are better, while still guaranteeing insurability, is the most prudent approach.

Tom Riekse, Jr., CEBS is managing principal at LTCI Partners LLC, a brokerage general agency specializing in Long-Term Care Insurance. Riekse has been working in the Long-Term Care Insurance business since 1991 with an emphasis on executive and group long-term care insurance. He can be reached at tom.rieksejr@ltcipartners.com.

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