Are You Selling A Solution To Something Your Client May Not Perceive As A Problem
LTC INSURANCE ROUND TABLE
So, you’ve been talking to your clients about long term care insurance and not getting the results you expect? After all, you are the trusted advisor, right? Your client should be listening to you and your advice, right? So, what’s the problem?
Maybe it’s your approach. Are you selling a solution to something your client may not perceive as a problem?
As Harley Gordon states in his CLTC class: It must be established beyond a reasonable doubt that a client believes he could live a long life and that, if he does, he may become frail and need care over a period of years. Reasonable people believe that they could possibly become frail or need care. This is a major reason clients want to preserve their investment portfolio. They expect to live a long life and know that unanticipated expenses—one of which may be the need for extended care—may come up as they age.
Once this fact is established, a plan can be created.
Ask your client: • In the event you live a long life, do you have a plan for extended care?
• How would you pay for extended care in the event you needed it?
• How would the lives of those who love you change if they are providing your care?
• Have you had a personal caregiving experience in your family or know someone who has had such an experience? Chances are you’ll get an affirmative response. Continue with:
• Did it bring the family together or tear it apart?
• How did it affect the family overall emotionally?
• How did it affect the family financially?
• How did it affect the family physically?
The responses to questions like these enable clients to understand what could happen to them and that the possibility of needing long term care should be something to plan for.
Unless a client really understands and believes that he could live a long life, could become frail and could need care over a period of years, the sale of any product related to long term care planning has no relevance.
When a client believes that health insurance, Medicare and Medicaid will pay for long term care needs, the following facts should be clearly explained:
• Health insurance is for acute medical care designed to get a patient healthy enough to care for himself. Health insurance does not pay for custodial long term care—at home or in a facility.
• Medicare is for rehabilitative care and will cover a patient for a maximum of 100 days. Without going into details, if a patient is showing improvement, the average length of Medicare coverage for a patient is about 12 days. Remind your client that Medicare requires a three-day hospital stay and treatment for the same impairment in order to qualify for long term care.
• And then there’s Medicaid, which is welfare and was introduced to provide care for the poor and indigent. It has been grossly abused over the years. Yes, the program will provide long term care for everyone and anyone—but you must be impoverished.
Next, ask: So where does that leave us?
Next discuss the three options available to your client if long term care is needed. (Actually, I’ve heard of other options from the flippant, but some of them are a bit messy.)
• The first option is to pay for extended care with income. True, many have the means to do so. However, keep in mind that adding a sizable expense to a monthly retirement budget may have dire consequences to the overall retirement.
• The second option is to convert assets into income. Let’s face it, assets don’t pay for care, income does. Converting assets to income isn’t free; in fact, in today’s market, it’s downright expensive. I’ve found that many clients who have planned for retirement haven’t considered what a strain long term care could be, if needed.
• The third viable option is to plan for long term care. Since there are a number of options available, LTC insurance could be the solution. However, keep in mind the linked benefit products, primarily life/LTC insurance and annuity/LTC insurance, have also established themselves in today’s marketplace.
• Here’s the bottom line: Demographically, Americans are older than it has ever been and the cost of long term care continues to rise. State and federal programs that cater to those needing care are strapped and it’ll only get worse. Families who haven’t planned for long term care are literally losing everything.
As the trusted advisor, it is your responsibility to have this conversation with your client. If possible, get the children involved. This is a family decision. If long term care is needed, it affects everyone.
By S.H. Koop for February 2012 issue of Broker World Magazine. Author’s Bio S.H. “Dutch” Koop, CLTC, MIM is the long term care product specialist at Hallett Financial Group.