Financial planners who subscribe to holistic planning principles recognize that wealth distribution and transfer are as important as accumulation. For some clients, the former issue may be even more pressing. So how can you protect your aging clients’ estates, preserve assets, meet needs, and ensure a legacy? One emerging tool is the purchase of a tailored long term care insurance policy.
But when should you actually broach the subject of meeting long term care needs, whether with or without insurance? And when can you expect clients to approach you with questions about the exorbitant costs of long term care? Here are a few tips to help you be proactive, rather than reactive:
- An insurance advisor first must recognize their role in this discussion. People retain agents because agents hold specific expertise about asset management that their clients do not. Since your client’s financial well-being is very much threatened by the risk of self-funding any long term care expenses, all clients are ripe for a discussion about long term care planning, giving you another opportunity to address their concerns.
- Examine client demographics and the looming need for LTC. It’s estimated that nearly 70 percent of those turning 65 will eventually need some form of long term care. The average stay in a facility is three years. The average cost of facility care can exceed $300 per day, for more than $300,000 total over the average stay. That means that, two-thirds of any given client base will be hit with the downside of this substantial financial risk. The chances are even greater for a client with longevity in their bloodline or a family history of certain diseases such as Alzheimer’s.
- Answer questions about each client’s financial picture. You should look at the size of each estate and determine whether it can take the hit of funding long term care and still remain relatively intact. Given the above figures, a client will need a sizeable estate to absorb the cost of long term care, as such expenses are increasing between 5 percent and 13 percent each year. In order to keep pace, the size of the estate must also dramatically increase. You must keep this in mind when identifying which clients will most benefit from LTCI.
- Target clients in their mid to late-40s to begin the LTC discussion, so that insurance can be purchased to maximize insurability and minimize cost. Insurance premiums are based on a client’s age and health.
- Don’t wait for a client’s “a-ha moment.” Rather, the proactive financial advisor should be the catalyst. Because clients will start asking questions when they truly appreciate the seriousness of the risk, you can maximize the opportunity to discuss LTCI by answering questions before your clients ask them or before the option becomes out of reach.
Now you no longer have to guess the best time to approaching your clients to discuss long term care insurance.
Steve Cain is executive vice president and sales leader at LTCI Partners, a brokerage general agency specializing in long term care insurance. He can be reached at [email protected].