Mention traditional long-term care insurance (LTCI) to clients and you’re likely to encounter a chorus of objections:
“It costs too much.”
“I’ve read that the premiums keep increasing.”
“What if I don’t use it? That means I’ve wasted all the premiums.”
These can be valid points. But the refusal to hedge against LTC costs still leaves clients exposed to expenses that could ruin their retirement finances.
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In response to LTCI objections, some advisors are combining life insurance and LTC policies to achieve the coverage clients need.
That solution appears to be going over well with consumers. LIMRA’s 2015 Individual Life Combination Products Annual Review reported that more than 200,000 combination policies sold in 2015, a 37 percent increase over 2014. Chronic illness riders are the more common features, but sales of policies with long-term care acceleration riders also showed strong growth for the year.
William Borton, CLU with W.R. Borton & Associates LLC in Marlton, New Jersey, has found that clients want an ideal policy that doesn’t exist. They want leverage, flexibility, guarantees and cash benefits but there is no perfect policy that provides all these features.
A better approach is to pull multiple products together so that their combined benefits come close to the client’s ideal, Borton says. The result is a customized coverage solution that he describes as a diversified risk management portfolio.
“We can’t customize insurance because it’s a filed product,” Borton says. “But we can tailor solutions. We take the policy off the rack and then we tailor it so it looks like it’s made for you.”
Kim Natovitz, CLU, CLTC, and an associate with TriBridge Partners in Bethesda, Maryland, takes a similar approach. She explains to clients that nowadays they can choose from a portfolio of products to address the LTCI and life coverage needs simultaneously.
“We may achieve the right solution for the client by looking at different types of products where we would either claim benefits simultaneously or sequentially,” she explains. “While 20 years ago we only had the traditional health insurance model, there are other products and solutions that are available.”