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Devising a long-term care plan for clients: A five step playbook for financial professionals

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If retirement planning is among the services you offer clients, chances are you use some kind of financial planning software. As many useful tools as these software platforms provide to help coordinate the various aspects of a retirement plan, there’s one that financial professionals tend to underutilize or even avoid altogether: the health care or long-term care module.

“A financial professional can do a great job with retirement, income, tax and estate preservation for a client. But when it comes time to click on the tab for planning for a catastrophic health care or long-term care event, they don’t always go there,” said Pat Foley, CLU, ChFC, president, Individual Life and Financial Services, OneAmerica companies.

But go there financial professionals must, he said. “They need to talk with their clients about the number one risk to their retirement nest egg—a catastrophic health issue that requires extended long-term care. And they need a plan for managing that risk.”

More specifically, clients need help from financial professionals to develop a clearly articulated long-term care plan, just as they need help with a retirement, tax, estate or financial plan. According to Foley, the three overriding goals with long-term care planning are:

  1. Protect the retirement nest egg from depletion;
  2. Give clients the means to self-determine how and where they receive care
  3. Discuss with loved ones a clear idea of their potential caregiving roles, if any, should the need arise

With elements of wealth protection, tax planning, retirement and income planning, a long-term care plan is merely an extension of—and an extra layer of protection around—the other types of plans a financial professional puts in place on a client’s behalf. 

“There’s value in certainty for clients, especially as they approach retirement,” said Dennis Martin, FSA, FCIA, MAAA, vice president, senior business & product development officer, OneAmerica companies. “As a client, I don’t want to wonder if I’m going to have any assets left to live on 20 years from now.”

A formal, well-articulated LTC plan removes that uncertainty from the equation. Here are the basic steps to devising one:

STEP 1: Raise the issue tactfully and raise it again until the client is ready to mobilize: As averse as many clients are to discussing their vulnerability to a health care crisis and subsequent long-term care need, it’s incumbent on the financial professionals to bring the subject up, given the havoc a sustained care need can wreak on retirement assets.

“’No’ doesn’t mean, ‘No, never,’ it means ‘No, not right now.’ So you should make a point to revisit long-term care planning with the client, to let them know this is a major issue,” said Michelle Prather, regional marketing director, Care Solutions.

STEP 2: Discuss the realities and the options available to address them:

The process of developing a long-term care plan starts with a conversation—or more likely, a series of conversations—around subjects that aren’t always easy to discuss, including the likelihood a person will need some form of care and the cost of that care. A 2015 report from HealthView Services estimates that a healthy 65-year-old couple retiring in 2015 will pay an average of about $395,000 in lifetime retirement health care costs. For a 55-year-old couple retiring in 10 years, that figure rises to about $464,000. The report also notes that the U.S. Department of the Actuary projects health care inflation remaining at a lofty 6 percent for the next decade.

After laying the facts out on the table, the discussion can shift to the type of care the client prefers (in their own home versus a nursing home), potential vehicles for funding it, the extent to which a spouse and other family members would be involved in caregiving, and more.

Once there’s clarity around those issues, it’s time to evaluate the best available options for addressing them. Is traditional health-based LTCi a good fit or would the client be best suited to another option, such as increasingly popular asset-based LTC products—instruments that deliver LTC benefits via the familiar constructs of a whole life policy or a fixed annuity?


STEP 3: Take action: Financial professionals are generally comfortable raising the issue of health care costs and LTC risk during retirement with their clients. However, results of a recent joint OneAmerica and survey show they are less comfortable with the actual process of LTC planning on their clients’ behalf. Indeed, 96 percent of financial professionals who responded to the survey indicated they had spoken to their clients about planning for health care costs during retirement. However, 40 percent indicated they are only “somewhat comfortable” with LTC planning, while nine percent said they are not comfortable with LTC planning.

Because they’re built on familiar annuity and life insurance chassis, and because they address many of the shortcomings and concerns typically associated with traditional stand-alone LTCi (over issues like large premium increases, use-it-or-lose it, etc.), asset-based LTC solutions may provide the additional comfort level financial professionals and their clients need to commit to obtaining a long-term care solution as the foundation for a long-term care plan.

STEP 4: Formalize it: “Don’t wait to put a plan in place, in writing,” said Prather. Remember that overlooked tab or module in your planning software? Here’s a chance to use it.

STEP 5: Revisit the LTC plan periodically: Given the frequency with which client circumstances and needs change, “a long-term care plan is something financial professionals should reassess annually with their clients and revise as necessary, like they would a financial or retirement plan,” Prather said.

Questions about asset-based LTC products? Contact OneAmerica at 1-844-833-5520.

OneAmerica is the marketing name for The State Life Insurance Company ® (State Life). Products and financial services issues and underwritten by State Life.