There are twin X factors that loom over all of your long-term care insurance (LTCI) prospects.
Setting the stage for an LTCI sale means addressing these factors, including:
- How do they intend to set up resources to provide a lifetime’s worth of income for themselves and their spouse or partner? and
- How they will pay for the possibility of a long-term care event?
These are the two most important conversations you can have prior to a client’s retirement. Here’s why.
- Longevity puts pressure on your prospect to have sustainable assets for life.
- A serious chronic health event could upset the financial viability of their income and savings/investments/retirement accounts while they are receiving care and impact future assets available for their healthy spouse/partner.
Of course, the information provided here is my opinion and does not necessarily represent the opinions of the insurance companies whose products I market. The following is for financial professional use only. Not for use with the general public.
But, in my opinion, long-term care planning is an important of planning for longevity risk. With regard to longevity risks, there are several different tools that can be used to help reduce the chance prospects will outlive their assets.
The goal for most individuals and couples is to provide an income stream that is insured or guaranteed to cover those “essential” fixed expenses that are difficult to cut back. I.e., mortgage/rent, utilities, some insurance coverage, basic food and medical costs, etc.
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In generations past, traditional defined benefit pensions and social security payments provided that kind of security and peace of mind. But with employers eliminating these kinds of pension plans and substituting them with 401k-like plans, the risk in retirement gets transferred over to the employee in most cases.
Beyond CDs and treasury securities, you might suggest to your prospects that they look at immediate annuities and variable annuities with living benefit guarantees to help address the desire for income.