LTCI can be a hard sell at times. These strategies will help you convince your client the product is a good buy.

Long-term care insurance (LTCI) has been around long enough with sufficient public awareness to ensure that the “sign-me-up” cases are a thing of the past. Public knowledge is plentiful on this product. That means you’re likely to encounter objections to buying the coverage–some valid, others unfounded. Overcoming those objections and misconceptions will mean the difference between getting the coverage in place or not. Here’s how experienced LTCI advisors respond to some of the most common objections you’re likely to encounter.

“It costs too much”

Cheryl J. Sherrard, CFP(R) with Rinehart Wealth Management in Charlotte, N.C., puts the LTCI annual premiums in the context of what a year’s care would cost in a skilled-care facility. This helps clients compare the annual LTCI premium of $2,000 or $3,000 with skilled nursing expenses of approximately $70,000 for a year in Sherrard’s area.

“It takes 23 years of paying premiums of $3,000 to equal one year’s care costs,” she points out. “It is also helpful to remind them that in the case of a married couple, not only would you have the skilled-care cost for the sick spouse, but you would continue to have all the normal living expenses for the well spouse. That can easily deplete a portfolio in a very short timeframe.”

Kevin J. Meehan, CFP(R), ChFC(R), CLU, CASL(R) with Summit Wealth Advisors, L.L.C. in Itasca, Ill., reminds retired clients that much, if not all, of their income will continue if they need long-term care. Those sources can include pensions, Social Security, portfolio income and so on. Consequently, prospective buyers often don’t need to insure the full LTCI cost, and Meehan focuses instead on covering the potential expenses that exceed their cash flows.

Framing the need that way–meeting the gap, not the full potential cost–gives clients a sense of relief that they don’t have to cover the entire LTC expense. “Couples respond differently if one is disabled as far as where they spend the money,” he says. “Typically the healthy one isn’t going to Europe anymore. And so a lot of their variable expenses change because somebody is ill. Some of what is being spent now may be freed up to go toward this care. So what we want to do is say, what’s the gap and then let’s buy that much coverage. Sure, ideally, all the risk is transferred, but realistically most people don’t have the premium tolerance to do that.”

The cost issue isn’t just about money, though–it’s also about having clients recognize their values, set financial priorities and decide how they would change their lives if they need LTC. Ted Gregory, CFP(R) with Gregory Advisors, Inc. in Huntington Beach, Calif., has his clients identify their values and near-, medium- and long-term goals as part of the financial planning process. He uses that information to develop a detailed financial model with two scenarios for the clients.

The first scenario assumes no LTCI but with the present-value of a convalescence at an agreed-upon age. The second scenario assumes the client has LTCI with the benefit applied to the cost of the same convalescence as modeled in the first scenario. Gregory then shows the clients how the different scenarios will affect their ability to achieve their goals. The result: Clients frequently either agree to purchase LTCI or substantially modify their stated values and goals, he says.

“I want to receive care at home”

Despite the widespread publicity LTCI has received, some clients still have major misconceptions about the coverage based on outdated information. When Sherrard encounters this problem, she explains that today’s LTCI policies are not the “nursing home” policies of the past. “(Because) they want to age in place and bring care in, they (believe they) won’t use the benefits that LTC would provide,” she says. “This is just a misunderstanding. The policies have changed drastically in what benefits they provide and most do provide at least equal benefit for care brought into the home.”

“Will my premium increase?”

Premium hikes on in-force policies make headlines and can dissuade potential LTCI buyers. Michael Smith, LUTCF with CPS Horizon in Hales Corners, Wis., contents that advisors should tackle that issue head-on. “If I were the advisor, I would advise the client that even though there are no plans to raise premiums, to expect some kind of rate increase somewhere down the line,” he says.

“Almost every single major insurance company that has long-term care policies has raised rates on existing blocks of business. I think it’s just important to prepare the client during the sales process that there is a likelihood that rates can be raised in the future and if there’s going to be a rate increase, it could be between 10 percent and 40 percent, somewhere in that area.” But it’s also worth telling clients that state regulators can scale back insurers’ proposed rate increases. Smith cites an example from his state in which Allianz asked for a 25 percent rate increase last year. However, the State of Wisconsin only allowed a 10 percent rate increase.

Another option to consider, particularly with clients who are still working, is to accelerate the LTCI’s premium payments. Meehan notes that many insurers offer clients the opportunity to pay the policy over 10 years and be done with it. That tactic has two benefits, he says: “You’re eliminating the premium in retirement and you’re eliminating a premium that can be increased.”

“What if I don’t use the insurance?”

Although clients will pay a lifetime of property and casualty insurance premiums and rarely voice that concern about those policies, it’s a common reaction to LTCI. The growing popularity of linked annuity-LTCI and life-LTCI products is helping advisors overcome that objection.

With a life-LTCI product for example, Smith says the coverage is usually purchased as a single premium policy. That means that rates cannot increase and if the client passes away without needing long-term care benefits, there is still something there left for the beneficiaries, he says. Similarly, annuity-LTCI policies can help clients reposition low-yielding assets and address the objection about premiums being “thrown away.”