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LTCI: Don’t tell, do sell

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Many advisors believe in long term care insurance (LTCI), yet struggle with the complexity of the topic when attempting to discuss it with clients. They often get lost in the details, leaving clients feeling overwhelmed by the number of decisions they’ll need to make.

This is the very reason I recommend advisors not talk about the insurance at all!

The reality is that few planning issues get solved when the topic is approached from the product side of the equation. Take, for example, a client’s need for life insurance. Many successful life insurance advisors will recommend starting with a question, in order to focus your client on what the consequences to their family would be if they should die too young. Similarly, to be successful in dealing with a client’s long-term planning issues, the first step is to help them see the need for LTCI; they must understand the consequences to their family should they ever have an event that brings about the need for long-term care. This is why I recommend not going directly to the subject of the insurance itself when starting the conversation.

Instead, a great question to start the dialogue is, “John and Suzy, when you think of each of your four parents, and each of your eight grandparents, did any of those twelve people reach a point in their life where they could no longer live independently?”

At first you might think this question is simple, yet it is specifically worded to guide your client’s understanding of LTCI. We want them to not only think of their parents and grandparents but also of their in-laws as well; so be sure to enumerate how many people you are asking them to think of. Our goal at this stage is to redefine their understanding of the words “long-term care insurance,” which typically in their mind is equivalent to “nursing home insurance.” By inserting the words “where they could no longer live independently,” you will properly define the scope of the conversation that will follow.

I have yet to meet a person in the right age demographic for this insurance who hasn’t had an experience of their own that they can relate to when they’re asked this question. Upon hearing it, they’re forced to think about how their family members’ lives ended, and quite naturally, they start talking about that experience.

Now you have the opportunity to dive in to your client’s specific family history with some additional questions. I recommend asking, “How did this experience change the family dynamic? Did it change how your siblings interacted with each other and with your parents?” Then you can delve into other subjects, such as how much this whole episode cost the family. Given all the questions you can ask in order to learn more about your client’s experience, you could easily go on for another 20 minutes.

The ultimate goal of this line of questioning is to get the client to agree that a similar chain of events could happen to them. I like to ask, “Have you ever thought about how a similar experience would be handled in your own family?” This is typically where you hear some of your first objections, such as, “My kids will take care of me,” or “Isn’t this the reason why the government created Medicaid or Medicare?”

There are many different versions of these objections, but they all tend to deal with the money side of the problem — and not the issue of “living independently at the end of their lives.” Take this opportunity to refocus them on the real issue: “So if I understand you correctly, you do believe that you could have a similar experience in your family. Would you be interested in learning how you can live independently without burdening your spouse or children, like your father did?”

Now that you have gained their agreement, you can educate them. The first step in this process is to learn more about their current health and financials. You will want to ask them for their height and weight as recorded by their doctor, a list of medications with reasons for taking them, and whether there has been any major medical diagnosis within the past 5 years.

This is also a great time to give them a cursory understanding of the cost of care and ask, “If you were required to pay for these expenses on your own, which of your current assets would you liquidate first?” Now you have the information you need to medically prescreen their health for the insurance, and the financial information to show your client how they can pay for the premiums of the insurance.

Remember, you don’t need to avoid discussing long-term care insurance because of the complexities of the topic. Stop selling the insurance product altogether — because we all know selling a product is more than likely going to fail —and get back to selling the consequences to their family if an event were to take place that creates the need for long-term care.

Most clients are looking for advice that will help them retire well — and living independently when the worst happens is key to every client’s financial plan.

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