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Life Health > Long-Term Care Planning

3 new fears about the long-term care planning gap

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Long-term care planning specialists headed into the 2016 Long-Term Care Awareness Month Tuesday knowing that being aware of the time bomb ticking in the corner is different from doing something about the time bomb.

Related: The wildcard of retirement planning: health care expenses

The Westlake Village, California-based American Association for Long-Term Care Insurance has come out with a new awareness month marketing kit. The kit includes marketing letters and other materials association members can use to get prospects to stop wondering dreamily about what might happen when they get old and prepare for the reality that they’re likely to get old.

Many distributors of traditional stand-alone long-term care insurance and related products, such as hybrids that combine life insurance with long-term care benefits features, or annuity-LTC hybrids, have posted press releases, sent calls to action out on Twitter and Facebook, and organized events aimed at retail agents, brokers and other people who work directly with consumers.

The Silicon Valley chapter of the National Association of Insurance and Financial Advisors has scheduled a luncheon course for Nov. 17 on a number of long-term care financing options, including long-term care insurance, life-LTC hybrids, and life policy accelerated death benefit provisions.

Radnor, Pennsylvania-based Lincoln Financial Group has commissioned a survey of consumers who have the means to prepare for the future — 500 U.S. residents ages 40 to 70, with a household income of $150,000 or more and at least $200,000 in investable assets, who said they knew something about long-term care — to find out why that ticking in the corner has blended in with bird song and computer hard drive hum.

Lincoln also sent Michael Hamilton, a vice president in its institutional product solutions unit, and Bill Nash, the national sales manager for its MoneyGuard life-LTC hybrid product, on the road to get some attention for the alarming new findings in the survey results.

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Vast planning holes

When Lincoln commissioned its survey, analysts designed the survey processed so that all of the prospects would be people of obvious interest to financial professionals.

All participants had the means to buy personal protection insurance, and 78 percent had life insurance. About 35 percent had annuities.

Only 28 percent said they had long-term care insurance.

Just 45 percent of the participants who had a financial advisor said they had talked about long-term care planning with the financial advisor.

And 53 percent of the participants who had discussed long-term care planning with a personal financial advisor had talked about the topic on “several occasions.” 

Narrow discussions

Many sellers of traditional stand-alone long-term care insurance have long thought of traditional long-term care insurance as the best, most affordable vehicle for protecting consumers against catastrophic long-term care risk. They have been skeptical of any arrangement that might reduce the amount of protection a consumer gets against that kind of family-crushing risk.

Issuers of the life-LTC and annuity-LTC hybrid products focused mainly on single-pay products aimed more at affluent families addressing asset-planning concerns than at protecting ordinary people against catastrophic piles of nursing home bills.

Today, issuers of stand-alone long-term care insurance are starting to see that the challenges in the stand-alone long-term care insurance market mean that families may have to look at a wider array of planning tools.

The issuers of the hybrids have introduced multi-pay products that let ordinary families get in.

But Lincoln found that only 19 percent of the survey participants who said they had talked about long-term care planning with a financial advisor had talked about life insurance with a chronic illness rider. Only 17 percent had talked with an advisor about annuity-LTC hybrids, and just 13 percent had discussed life-LTC hybrids.

One lingering barrier may simply be that some of the advisors who do have an interest in long-term care planning lack the professional certifications they need to talk about other options, Lincoln executives said.

Related: LTCI Watch: $400

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Failures to act

Another challenge is that some consumers who could protect themselves against long-term care risk, and know they should, simply haven’t.

An advisor told those consumers about the need for them to do something, but did not close the sale.

Bill Nash, the MoneyGuard sales manager, said he thinks one way for a financial professional to close the sale, on doing something about the long-term care time bomb, is to get a consumer to envision what might happen if the he or she has not prepared for long-term care expenses and suddenly faces such expenses, or the need to act as a full-time caregiver without adequate support.

He recommends finding out finding out what clients enjoy doing and asking, “What if you couldn’t do that? Is that a concern for you? Is that something you’d like to protect against?”

Nash said that, for himself, one driver is wanting to protect the time he has available to watch his children play sports.

Other people who may need care, and who may end up acting as caregivers, will have their own unique drivers, Nash said.


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