Bringing up the subject of long-term care may be difficult. But, in fact, it may be one of the most important discussions a client will ever have with their financial professional. Unfortunately, too many clients avoid the subject like a contagious disease, thus, too many financial professionals shy away from the topic.
But with careful thought put into the approach and proposed solutions, an outcome can be had that will leave your client feeling good about your expertise and professionalism. Here are five tips to assist you with client LTC conversations.
Be careful how you open the LTC conversation.
The most common mistake a financial professional makes is the approach. When you say the words “long-term care” to clients, they often hear the words “nursing home”. This often causes the client to shut down, for this is not a discussion they want to have.
The good news is we know statistically that 79% of new LTC claimsare for home health care1. We also know most people would prefer to receive care in their home as long as possible.
Consider using an approach such as: “Mr. and Mrs. Smith, as part of what we want to accomplish today with your financial strategy, let’s discuss how to keep you in your home longer should you no longer be able to care for yourself.” This approach changes how the client views the conversation into something positive— being able to remain in their home.
Make sure you understand the important differences between products and their features
Understanding the various LTC options available opens the door for LTC sales you may have overlooked. In addition to traditional stand-alone long-term care policies, there are now asset based LTC products and solutions linking LTC riders to life insurance and annuities. Each of these products addresses a different client need and/or obstacle. Make sure you understand what protection the products offer.
Type of care that qualifies for coverage varies between companies and some companies may limit claims to permanent conditions only. By having a thorough understanding of the different categories of LTC solutions that exist, as well as their features, you will have a better chance of putting a solution in place for your client.
Connect the dots between the client’s LTC needs, goals and financial picture
Once you have awareness of what products are available, it is important to connect the dots. Each client has a different big picture outlook and/or ability to qualify for a LTC solution. For example:
- Stand alone LTC policies may appeal to a client who is looking for the most customizable and comprehensive coverage. These clients have the needed liquidity combined with a desire for choice in plans. And for those with a significant family history of LTC events, this offers the best source for maximum coverage.
- For someone unable to pass health qualifications, or someone with limited assets for annual premiums, an annuity/LTC linked product may offer assistance. Good news: Some annuity/LTC products are available requiring no underwriting. While this solution may provide less monthly benefit and fewer coverage options than other solutions, it’s still a help to someone with no alternatives. Unused contract value goes to a beneficiary.
- For people who can afford a large single premium and are looking for good LTC coverage with asset retention and a return of premium feature, an asset based product may be appropriate. However, your client may not have the desire or ability to lay down a large sum of money at once.
- For clients looking to leave as much money as possible to beneficiaries, preferring flexible premium options and choice of base insurance product, a life/LTC linked product might supply a suitable plan. The entire pool is available to be paid as monthly LTC benefits, and whatever is left in the pool is paid as a death benefit. While this plan may not provide as much in LTC benefit, it generally does provide a greater amount that can be left to beneficiaries.
Don’t underestimate which clients would be a good fit for LTC coverage
One common mistake is to assume a client is too young, too unhealthy, too wealthy or not affluent enough to purchase LTC protection. Clients under age 40 may be willing to add an LTC rider on the life insurance they are already purchasing.
These riders are generally inexpensive at younger ages and add value to the policy a younger client can accept. Clients with poor health or limited assets can use the annuity solution as a help in hedging potential LTC costs. The somewhat affluent and even the wealthy, while often quite able to self insure, may appreciate the financial wisdom of insuring the LTC risk to better preserve their assets for inheritance purposes.
Use storytelling to help with client objections
Storytelling can be a powerful way to help bring clients into reality about a financial issue they may be facing. As a financial professional, you may have encountered many stories (keeping names confidential of course) that can help a client picture the risk they take if deciding not to insure their potential LTC needs. You may even have your own personal story to tell. But it is important the story you tell is sincere as most clients can see through a fabricated one.
Careful analysis of a client’s financial situation, thorough knowledge of product opportunities, a compelling story, and forethought to approaching the LTC discussion will allow you a better opportunity to offer your client the type of LTC coverage they are more willing to purchase for protecting their assets, protecting their family from burden and protecting their own choices for care.
Shawn Britt, CLU, is director of advanced sales with Nationwide Financial Services in Columbus, Ohio. She may be reached at firstname.lastname@example.org.
1 The 2011 Sourcebook for Long-Term Care Insurance Information