I started my company in the summer of 2001, and since that time I have always measured my growth by the amount of assets I manage. This includes both assets under management (AUM) through my RIA firm as well as fixed annuities. I speak at agent conferences around the country, and many of the advisors I speak with also focus almost exclusively on assets captured.
However, several years ago I began to realize I was overlooking a very critical need for my clients; and by not servicing this need, I was not only missing out from additional profit centers, but I was also allowing other advisors a potential foot in the door.
I was focusing almost entirely on the investment, income and estate planning needs of my clients. While I feel very confident that I’m doing everything I can to help manage the investment risks of my clients’ portfolios, I was missing two critical risks:
- The risk of one spouse significantly outliving the other.
- The risk of long-term care.
I believe that the insurance industry has done a fantastic job in meeting these needs. Of particular interest to my clients are asset-based hybrid products which combine many of the benefits of both life insurance and long-term care insurance.
I like the idea of asset-based products because they continue to be an asset on the client’s balance sheet. While it is primarily an insurance asset, some of these hybrid products provide a cash asset as well. But, either way, if the client holds onto the policy, it can provide some kind of benefit either for long-term care, at death, or both.
Peace of mind
I am aware that much of the focus in the life insurance industry focuses on estate planning and wealth transfer. However, I have found that serving the needs of the surviving spouse provides tremendous peace of mind for my clients, and by using accelerated benefit riders I can help supplement long-term care needs as well.
When I work with clients who are primarily concerned about long-term-care risks, I use a product that multiplies the death benefit for long-term care. While this type of product will usually provide for a lower death benefit than with traditional insurance, it often provides a much higher limit for long-term-care needs.
If you do not write a good bit of life and asset-based long-term care business, I recommend you begin reviewing your client files with these critical risks in minds. How much income will be lost when one spouse dies? Have they covered the risk of long-term care? If so, does it provide enough coverage? What if the long-term-care premium increases dramatically?
By identifying these risks, you’ll not only serve your clients much more effectively, but you’ll increase the number of profit centers in your business.
For more from Jim Brogan, see: