I often write about my disbelief at the many creative excuses people use to avoid conversing with me about even the generalities of responsible long-term care planning. Allow me to call this behavior “Front End Denial” because people deny their potential need for long-term care even before they know ANYTHING about the topic.
This month I’m addressing a phenomenon I’ll name “Back End Denial.” It is even more frustrating than the garden variety “Front End Denial” because it’s far scarier.
“Back End” case studies
Let me give you two examples of what I’m talking about. Here are my actual progress notes from example one:
Phone call, Thursday, October 14, 2010
Call from Asa. Disoriented. Bonnie in bad shape, cognitively impaired. Had circular conversation with him. He sounds “with it,” but I don’t think he is. I helped him understand her policy. I told him I believe she is eligible to collect from her LTCI. I offered to “make it happen” and get care for Bonnie right away, paid for by her LTCI. He does not want to trigger her policy yet and has rationalized why. I urged him not to hoard this policy. I asked who I can talk with on his behalf but he gave me no other contact. I told him I believe being Bonnie’s caregiver is taking a toll on him.
Checking my records, I confirmed that both the husband and wife purchased LTCI from me in 1996. Their policies have built-in 5% compound benefit increases and a 0-Day elimination period. Current daily policy values are approximately $160/day.
Why are they hoarding Bonnie’s policy? How can I break through their denial and get them on claim? I believe they are in physical danger without the care their LTCI will pay for.
Here are my progress notes from example two:
Phone call, February 10, 2010
Speaking with Jeanette about her LTCI premium. She sounds a little “fuzzy.”
Phone call, Monday, September 20, 2010
Jeanette called in. She is having chemo. She agrees that assisted living (AL) would be the best option for her. Discussed that she can collect $4,500/month from her LTCI for AL and it is safer/better for her. Explained her finances may actually improve if she will use her LTCI. I mentioned her policy would go into waiver of premium if she would collect. I urged her to go to AL for her chemo treatments, which she described as debilitating. She said she would check back with me.
Phone call then email, February 11, 2011.
Spoke with Jeanette’s son, Kirk. Jeanette is very sick. Finally ready to start collecting from her LTCI. Referring her to Carol at www.aplaceformom.com.
Post-script on example two: my local representative at www.aplaceformom.com has just told me this client has now been placed in an assisted living.
I estimate this client should have been collecting from her LTCI for over a year by now. Finally, she is willing to collect from it. Hallelujah! This client bought her policy from me over ten years ago when LTCI was a lot less expensive. Her policy is luxe. It has a 0-Day Elimination and Lifetime Benefit periods. I had tried to explain to this client that there was no downside to collecting from her LTCI and getting the additional care it would pay for.
Something else of great concern to me: I’ve had quite a few situations where my clients’ kids didn’t even know they owned LTCi. My clients could have and would have collected, but no one knew about their LTCI!
So, what causes “Back End Denial” and why is it so common?
Of course, there is no clear answer to these questions. Advisors need to be aware that Back End Denial exists and is extremely prevalent. If you are selling LTCI and haven’t encountered it yet, you will.
When you do encounter Back End Denial, it’s important to do everything in your power to combat it. Often, there’s nothing you can do except stridently tell clients they need to go on claim, explain why, offer to assist them with their claim in any way possible and document it, as I’ve done.
To avoid Back End Denial, I take certain front-end precautions during my LTCI sale and policy placement. In addition to teaching how LTCI works and discussing their policy specifics, I describe Back End Denial in as much detail as possible during my presentations. I explain that LTCI ownership is all about getting care as soon as it is needed, not about being a martyr and denying the need for care. If opportunity presents itself, we talk about how denying the need for care can hasten decline and cause unnecessary physical and emotional stress to those closely involved; the very people they most want to protect.
When policies are delivered, I print copies of my clients’ LTCI policy Schedule pages and send them a scanned copy, too. Every Schedule page has my name and number stamped on it, along with the insurance company’s name and phone number. I ask my clients to share copies of these Schedule pages with their closest friends and loved ones NOW. I tell them I always welcome their calls and those of their loved ones. I tell them stories of Back End Denial in hopes that this will prevent them from becoming one more example of it.
It is my hope that as more and more LTCI is placed, and more and more people understand when LTCI is supposed to pay, Back End Denial will fade away.
For more exclusive LTCI coverage, visit ASJ’s LTCI Resource Center.
Past LTCI stories from ASJ: