Establishing the valuable role long-term care insurance (LTCI) can play in safeguarding your clients’ retirement is a great way to start the LTCI conversation.
Once clients understand how LTCI can help them maintain the highest possible quality of life, the path to action becomes much clearer.
That’s not to say that price becomes irrelevant. Clients may still have questions about the price of coverage.
I’ve found that one of the most effective ways of disarming price objections — or preventing them in the first place — is to show clients the enormous potential leverage contained in any long-term care policy.
Emphasizing a policy’s daily benefit tends to distract clients from the much more powerful potential of a long-term care policy. Consider, for example, an agent who describes a policy as offering “a $200 daily benefit for two years with a 3% cost of living adjustment.”
When the benefits are described in that manner, they can be confusing and — even worse — underwhelming. After all, if a client is weighing a several-thousand-dollar annual premium that may be paid for decades, a $200 daily benefit may sound somewhat insignificant.
Long-term care recommendations are much more compelling when the potential benefits are aggregated. For example, the very same policy could be described like this: “We’ve designed a plan so that, if something happens, you’ll have access to $200,000 in five years and more than $400,000 after 15…and it’s all paid out without incurring federal income tax.”
According to the American Association for Long-Term Care Insurance, Westlake Village, Calif., only 27% of applicants are below age 55. I think our industry has an opportunity to do a better job with that segment of the population and, particularly, with those in their late 40s and early 50s.
Many of these individuals are in the so-called sandwich generation, with children at home or in college and parents who need an increasing amount of assistance. While helping their parents heightens their awareness of long-term care needs, they face competing priorities, like college funding and retirement savings.
While lower premiums at younger ages are an important consideration, I don’t advocate a price-only, “blue light special” approach. Although premiums are indeed likely to be higher in the future, it’s even more important for clients to understand another aspect of the economic value of LTCI, and to realize that their very ability to purchase coverage can vanish in an instant.
Since few of us have ever met someone whose health gets better over time, we can all appreciate the value of doing the right planning today — while we can still secure coverage. As I’ve heard one exceptional producer say, “This is about planning 20 years before something happens…rather than 20 minutes after.”
LTCI: IT’S ONLY AS COMPLEX AS WE MAKE IT
It’s often said that long-term care is a complicated product. Surprisingly, those sentiments are often voiced by insurance producers who routinely help their clients with products — like variable universal life and equity indexed annuities — that are arguably just as complicated or even more so.
As with so many things in life, long-term care is only as complex as we make it.
To me, it has a very simple value proposition: “If your doctor determines you’re chronically ill or need extended health care, LTCI will help cover the costs in a way that leverages your premium dollars and helps you have the best retirement possible.”