Editor’s Note: The following is an excerpt from “How things are shaping up in the LTCI market: A Life Insurance Selling Producer Roundtable,” which appears in the November issue of Life Insurance Selling.
Even though public awareness of the need for LTCI appears to be increasing, producers still need to help prospects feel the importance of being adequately protected. Can you share an approach that you’ve used that has been particularly effective in helping your prospect understand the need for LTCI?
Mark S. Jones, LUTCF, president of Remington Insurance Group, Houston: We ask three very simple questions and follow with appropriate responses:
1. “How’s your current health, and are your parents still alive?” Healthy people in their 50s and 60s often live into their 80s and 90s, and genetics can play a key role.
2. “Have you had any personal experience with the costs associated with long-term care?” Their true knowledge base is exposed fairly quickly.
3. “Are you aware if you eventually need any type of long-term care, there are only three funding choices for you to consider?” First, some sort of government-funded plan, such as Medicaid, or your family members. How reliable is that option? Second, a personally owned LTC-type insurance policy — which places the owner/insured in control. Third, self-insure — the use of your personal assets. If self-insurance is the preferred choice, the follow-up question then becomes, “Which assets will you liquidate first?”
Also, annuities that qualify under the 2006 Pension Protection Act are excellent alternative tools for helping fund LTC expenses. If insurability is an issue for traditional LTCI or even hybrids, a PPA-compliant annuity can be funded and made accessible, income tax free, for qualified LTC expenses. Older deferred annuities with sizeable gains should also be evaluated for a possible 1035 exchange. Even though these are modestly underwritten — and a person can be declined — it is not to the extent of a traditional LTCI policy.