Don Levin, JD, MPA, CLF, CSA, LTCP, CLTC

In the spirit of education and awareness, it’s vital to understand the various sundry myths put forth by clients, and unfortunately sometimes by their advisors, on the concept of self-insuring themselves against the risks of long term care.

With millions of years of policy data from insurance carriers and an even greater array of statistics compiled by various government agencies and private entities, we know the risk of requiring long term care services at the end of one’s life is over 70 percent. For couples, this number soars to more than 90 percent, and single females (never married, divorced, widowed) are more than 79 percent. Rather than referring to the “chance” of requiring long term care, it’s more appropriate to use the word “probability.” After all, the numbers associated with this risk have simply become too overwhelming to ignore.

Many clients and, sadly, some of their financial advisors and/or estate planning attorneys think that insuring for long term care is something primarily for the middle class with only limited funds that require protection, and that more affluent clients can afford to self-insure against this risk.

As it turns out, many self-made affluent individuals who could certainly afford to insure against this risk often choose not to self-insure because they do not want to place their hard-earned fortunes at risk. Take, for example, a client from 1999, who was a retired orthopedic surgeon with three luxurious homes in Chicago, Scottsdale, and Palm Springs. According to his calculations, his annual expenses related to the upkeep of these homes, country club memberships, cars, and other ordinary life expenses exceeded $300,000 ($546,271 in 2023 dollars). Plus, this client could lay his hands on ten million dollars cash in just 24 hours’ time. The premium would be next to nothing for him. Some advisors or attorneys might have asked themselves, “Why am I even here? Why bother?”

However, this client understood the importance of having a plan in place. He knew that if his wife suddenly fell ill, he could care for her as a doctor. But as her husband, he would be a complete basket case. That’s why he was so earnest in his questions regarding the scope of the proposed policy. He knew it would take just a phone call to have a team of professionals put together a plan of care, find the caregivers, and even raise the commodes, lower the vanities, and put grab bars in the shower. And that’s exactly what he wanted.

For this client, it wasn’t about the money. He could afford to pay for the necessary services and even considered buying a barebones policy just to have access to all the services that the policy will offer. However, when looking at it from a dollars and cents point of view, why would he use his own money to pay for some services when he can use an insurance policy to pay for all of these services? This way, he is leveraging his money and protecting the estate he and his wife want to leave to their children and grandchildren as well as to charity.

This man knew exactly why he was purchasing this protection. In addition to affording himself, his wife, and their family the advantages of insuring their portfolio, he was also presenting a gift to all of them by eliminating the need for his children to become uncompensated informal caregivers and allowing them to be care managers who oversee the activities of professional caregivers. Unfortunately, not all clients have proven to be this insightful.

Why else should people of affluence purchase long term care insurance? People of affluence tend to avail themselves of better medical care, often have healthier lifestyles, and as a result tend to live longer lives. Studies show that the longer you live the more likely you will need long term care. As a result, the good health these clients enjoy may bring a greater chance of needing long term care in the future.

When affluent clients do require these care services, they will likely pay more for them than their middle-class contemporaries. Why? The reasons for this assumption are somewhat obvious when placed in context. The affluent tend to want better quality long term care, which translates into higher daily costs. Like most clients, the affluent are more likely to want to stay at home regardless of the associated cost to do so. They often live in conditions that some can only dream about, and do not want to sacrifice the quality of life to which they have become accustomed.

If deteriorating health conditions dictate that they leave their home, these very same affluent people are only going to enter the choicest of long term care facilities in the more upscale area of the municipality in which they reside. It is also reasonable to assume that they will insist upon a more costly private room if not a suite of rooms.

A review of associated demographics indicates affluent people may be less likely to receive care from their children because the education and upbringing these children have enjoyed may have thrust them into higher profile and/or demanding jobs. With fewer children being born and more women in the workforce, we have grown beyond the society portrayed by the Waltons. Multi-generational homes are largely a thing of the past, and the questions of dignity and self-determination loom even larger with this caste group.

Unfortunately, because these people of affluence are often healthier than other cohorts, they are also more prone to deny long term care will be part of their future. When dealing with clients like these, it’s important to become a denial-buster. Rather than bombarding them with the numbers associated with the risk of needing these long term care services, pivot and instead address the consequences of making the wrong decision to not purchase a LTCI policy.

Once we enter this realm, quietly begin asking them to consider the consequences and potential impact on their spouse, their children, their financial portfolio, and the very quality of life that they may have to give up when they can no longer cover escalating costs with their own money. The unfortunate reality is many families have to sacrifice assets to pay for professional long term care services that they can no longer provide to ailing loved ones.

Ask clients which of their assets they will liquidate to pay for these services, forcing them to consider selling off the boat, the vacation home, or some of their other prized collectibles.

A review of their portfolio and positioning long term care as an invasion of principal that will not recover with the passage of time (as it did after the market crashes of 1987 and 2008) will often provide the sobering reminder that pre-crisis planning is a far more economical way to protect their life and lifestyle than self-insurance.

While there are fewer carriers with traditional long term care products than 25 years ago, there is a more varied array of products offered by a smaller pool of carriers. For clients who do not want to risk paying for something that they may not avail themselves, it’s crucial to pivot and offer them additional life insurance coverage with a long term care or chronic illness rider. For some clients, a linked benefit, asset-based, hybrid, or combination product might make sense. The key is that these products all offer a stop-loss feature against the ravages of long term care and allow the policyholder to again avoid the potential pain of complete self-insurance.

There are three ways to pay for the long term care that the majority of us will likely require before we leave this earth: Be very rich (where self-insurance is possible, if not practical), be very poor (where the government steps in with Medicaid assistance), or be insured.

So, if you have a spare million dollars and no desire to leave a legacy, then self-insurance might be for you! As for the rest of us, we will continue to pay our long term care insurance premiums, even with the accompanying in-force rate actions, because the alternative of self-insurance is just so unappealing and ever increasingly expensive.

Free Stock photos by Vecteezy

For 66 percent of retirees, Social Security is their primary source of income.¹ This may not have been a daunting financial undertaking for the federal government when the Social Security Act was originally signed into law in 1935. After all, life expectancy was just 63 years old at the time. Today, however, the population is living longer, much of the Baby Boomer generation is either in or nearing retirement, and current workers barely outnumber beneficiaries collecting Social Security. Therein lies a huge problem. Social Security was designed as a supplement to retirement income, not to be the primary source of income.

In the 1990s, the average retiree owned their home clear of any mortgage encumbrance, had a pension, and was receiving the supplemental Social Security benefit, as it was intended. However, the average client planning for retirement today is often in their third, fourth, or fifth job or company and still has a mortgage payment. Meanwhile, they are also attempting to save something for retirement while paying for their children’s college educations and often bearing the burden and expense of providing long term care for their parents. Unfortunately, managing these additional costs and burdens can result in a loss of income and cause physical, emotional, and financial suffering for the individual as well as their loved ones.

For many current clients, realizing these additional costs and caring for their aging parents has prompted them to consider their own future care. After all, the probability of needing long term care for individuals aged 65 and older is approximately 56 percent.² That’s where long term care insurance comes in.

The History of Long Term Care Insurance and State Partnership in the United States
In 1935, President Franklin D. Roosevelt signed the Social Security Act (SSA) into law. Under the SSA, the Old Age Assistance program makes federal money available to the states to provide financial assistance to poor seniors. The law specifically prohibits making these payments to anyone living in public institutions, thus spawning the creation of the private nursing home industry.

In 1950, an amendment to the SSA required payments for medical care to be made directly to nursing homes rather than beneficiaries of care. Under the amendments, states were also required to license nursing homes to participate in the Old Age Assistance program.

In 1965, President Lyndon B. Johnson signed legislation enacting Medicare and Medicaid as amendments to the SSA. Medicare’s focus is on acute care only and does not provide for long term care. Medicaid allows for coverage of long term care in institutions but not in the home, creating a bias in favor of institutional care. Under this legislation, the federal and state governments became the largest payers for long term care, while nursing home utilization increased dramatically along with government expenditures.

In 1974, SSA amendments authorized federal grants to states for social services programs, including homemaker services, protective services, transportation, adult day care, training for employment, nutrition assistance, and health support. Final regulations for skilled nursing facilities were put into effect and enforcement of compliance with standards such as staffing levels, staff qualifications, fire safety, and delivery of services became a requirement for participation in Medicare and Medicaid. Several insurance companies launched the private long term care insurance industry with the intent of allowing individuals to purchase insurance policies that will pay for these necessary services and remove them from the public welfare system. Later policies expanded from coverage only for nursing homes to include home health care, assisted living facilities, memory care, and other variants often covered under alternate plans of care.

In 1992, four states (California, Connecticut, Indiana, and New York) implemented qualified state long term care partnership programs for their citizens. The following year, Congress enacted the Omnibus Budget Reconciliation Act, which prevented the expansion of these programs to the other forty-six states.

The Omnibus Budget Reconciliation Act of 1993 (or OBRA-93) was a federal law that was enacted by Congress and signed into law by President Bill Clinton on August 10, 1993. In terms of long term care insurance, this legislation established minimum standards to improve the quality of private insurance for long term care and tax incentives to encourage its purchase.

The Health Insurance Portability and Accountability Act of 1996 (HIPAA), Public Law 104-191, was enacted on August 21, 1996. HIPAA created tax qualified plans, deductibility of premiums paid, based on age. Individual and group plans that provide or pay the cost of medical care are covered entities. Health plans include health, dental, vision, and prescription drug insurers, health maintenance organizations (HMOs), Medicare, Medicaid, Medicare Choice and Medicare supplement insurers, and long term care insurers (excluding nursing home fixed-indemnity policies).

In 2005, Congress enacted the 2005 Deficit Reduction Act (DRA) which eliminated $40 billion of federal funding from state administered Medicaid programs but also provided the balance of the states the option of enacting their own partnership programs. The DRA provided federal funding to states to expand community-based care; authorized the Medicaid Money Follows the Person (MFP) Rebalancing demonstration program; allowed states to add an optional Medicaid state plan benefit for HCBS; and allowed states to offer self-direction of personal care services. It also lengthened the look-back period for transfers of assets for nursing home Medicaid applications from 36 to 60 months. In addition, it allowed for qualified state long term care partnerships, which encourage individuals to purchase long term care insurance while still allowing them to qualify for Medicaid if their care needs extend beyond the period covered by their insurance policy.

The Government Takes Action
In 2023, the largest line item in most state budgets is Medicaid. Even with funding from the federal government, states struggle with this particular expense because of the ever-growing need for long term care required by its citizens. If the Baby Boomers as a cohort require the level of long term care that is anticipated and if they have not purchased private long term care insurance, this comprehensive expense will break the Medicaid bank.

Congress has made a token gesture at preventing this disaster by passing legislation that encourages the purchase of private long term care insurance, tax qualifying these plans with accompanying deductibility of premiums, as well as the advent, and eventual expansion, of the partnership programs.

Currently, the states themselves are finally taking action to prevent this tsunami from breaking their respective banks. In 2021, Washington State launched the Washington Cares Fund,³ which created a 0.58 percent tax on all W-2 employees aged 18 years and older. This prompted the public to purchase some 470,000 traditional and non-traditional long term care policies in order to opt out of this tax.⁴ Whereas Washington State generated only about three percent of national LTCI sales in 2020, this surge in sales ultimately accounted for 60 percent of national sales in 2021.⁵ To date, there are 10 other states in various stages of considering a like program for their own citizens.

Qualifying for Medicaid
Despite the WA Cares Fund and other states considering similar programs, the reality is Medicaid continues to be an essential resource for seniors who require long term care. However, in order to qualify for Medicaid assistance, an applicant must have assets and income below specific levels established by each state. Applicants in most states are limited to $2,000 in countable assets in addition to exempt assets, such as a marital home, one vehicle, and other personal effects. Applicants typically must spend down any assets that exceed these limits to meet this threshold and financially qualify for Medicaid.

Medicaid also has a standard lookback period of five years in most states. The two most notable exceptions to the five-year lookback period are California, which limits it to 30 months, and New York, which is in the process of fielding a similar provision. During this period, the applicant may be penalized based on any divestments made by them or their spouse. If Medicaid determines the lookback period has been violated, the applicant will be penalized based on the dollar amount they have transferred to others. This penalty is calculated using a state-specific penalty divisor, which is determined based on the average monthly cost of a nursing home in a specific state.

Example: Calculating the Medicaid Penalty Period
John applies for long term care Medicaid on January 2, 2023. Within the lookback period of 60 months, Jim sold his cottage to his son for $20,000, much lower than the fair market value of $120,000, and gifted his granddaughter $15,000 for college. John has disqualifying transfers in the amount of $115,000 ($100,000 for the house + $15,000 gifted). In John’s state, the penalty divisor is $8,500/month. For every $8,500 gifted or sold under fair market value, John will be penalized with a month of Medicaid ineligibility. Therefore, John will be penalized with 13.5 months of ineligibility ($115,000 ÷ $8,500 = 13.5 months), during which time John must pay privately for his care before Medicaid begins.

How the LTCI Policy Works with the Medicaid Program
State partnership-qualified long term care insurance policies essentially form a partnership, or better, a collaboration, between private insurance companies and the public government. Partnership policies exist for the expressed purpose of encouraging the purchase of these policies to help cover the costs of long term care while diminishing the burgeoning burden on the states to pay the high costs associated with long term care, which continues to be the single largest line item in each state’s Medicaid budget.

State partnership plans offer policyholders dollar-for-dollar protection and can serve as excellent estate planning and asset preservation tools. Owners of partnership qualified LTCI plans can protect some, or in some cases all, of their estates, depending on the depth and breadth of the plan and the size of the estate as well as the length and degree of required care.

In the event the policyholder exhausts their LTCI benefits and must continue with care under Medicaid, the assets that were protected by a partnership qualified LTCI policy are also safe from Medicaid’s mandated asset recovery program, further ensuring these assets remain as inheritance for family after the passing of a Medicaid recipient. This also allows Medicaid recipients to, in essence, retain assets above and beyond the limits set forth by Medicaid.

To date, nearly all states have their own version of partnership. States that do not currently have partnership are Alaska, Hawaii, Mississippi, and the District of Columbia.

The huge advantage of the asset protection afforded by a partnership qualified LTCI policy is that an individual, or couple if purchasing a shared plan, can protect additional funds, dollar-for-dollar, based on the amount of coverage paid out by the plan, and subsequently qualify for coverage. For most people, the single largest asset that they possess is the family home. With a qualified partnership LTCI policy, a Medicaid recipient can declare their home as a “protected” asset, thus protecting it from the mandated Medicaid estate recovery program. This allows the home to remain with the family as inheritance.

Example: Partnership Qualified LTCI
Scott has always been a planner, so when he met with his advisor he decided to purchase a partnership qualified LTCI policy. He faithfully paid the premiums over the years, and because of the inflation rider partnership required, the policy’s pool of benefits grew. Eventually, Scott’s family and doctor determined that Scott’s declining health and his inability to perform two of the six activities of daily living warranted filing a claim with his LTCI carrier. Ultimately, over the course of three years, he received reimbursed benefits totaling $300,000 before the policy pool was exhausted. Still very much alive and in need of care, Scott’s family assisted him in applying for Medicaid. At the time of application, Scott’s house was valued at $225,000, and he had modest cash on hand in a checking account of about $85,000. Because of his partnership qualified LTCI policy, Scott was eligible to retain $300,000 (his home and cash assets) in addition to his standard allowance of $2,000 while still qualifying for Medicaid.

Requirements for a Policy to Be Eligible for a State Partnership Program
A long term care partnership policy provides the added benefits of offering those who own them a way to protect their assets, dollar-for-dollar, in the amount of policy benefits paid out on their behalf in the event they ever need to apply for long term care benefits under a particular state’s Medicaid program. Additionally, a long term care partnership policy has beneficial tax treatment and requires inflation protection features that protect younger purchasers from increases in expenses caused by inflation.

For most people, the benefits of a partnership policy are likely to cover all the care they will ever need. However, because of the unique asset protection feature, they won’t have to impoverish themselves if they run out of benefit coverage and still need care. The individual plans must conform with federal guidelines in terms of tax qualification, benefit triggers, and other defined conditions. Partnership plans are portable and can be utilized in any state, provided both states have partnership programs and mutual reciprocity agreements.

Partnership plans accentuate the very reasons people have purchased this form of insurance for nearly fifty years since they prevent them from becoming burdens on their family. Additionally, long term care insurance assists in maintaining their independence, prevents the dissipation of assets, and preserves their personal dignity. It also prevents them from becoming dependent upon the government for welfare assisted services.

The Table To The Right Shows States That Have Approved Long Term Care Partnership Insurance.⁶

Alternative Policy Design Options Your Clients May Want to Consider
Traditional long term care insurance saw its high-water mark in 2002 with over $1.024 billion in policy sales.⁹ Since that year, sales for the traditional product offerings have dropped (with only an occasional bump in sales that reversed this trend) with more and more consumers and producers flocking to hybrid/combination/asset-based products that usually consist of life insurance with a long term care rider or an annuity with a long term care rider.

These policies have great appeal to people who fear they will not use the policy and essentially waste these premium dollars. For them, the “Live Die Quit” mantra may be presented because if they do live and require long term care, the policy will have available benefits; if they do not use the long term care aspect of the policy, they will eventually die and their beneficiaries can avail themselves of the death benefit; or, if they change their mind down the road, they can recover their invested principal.

Conclusion
With the advent of new pharmaceuticals, advancements in the practice of medicine, and changes to lifestyle and eating habits, as a society we are lingering longer. When Theodore Roosevelt was President of the United States at the beginning of the twentieth century, life expectancy was only 47 years of age. Today, it is more than 81. While the U.S. is faring better than many other countries, our demographics reveal a population that is aging in place with diminished available savings and a growing need for long term care.

As more Americans require long term care, Medicaid continues to be the largest payer of these costs. Therefore, the elderly will only continue to apply for benefits in order to meet long term care needs at the end of their lives. Long term care insurance, particularly those plans that are partnership-qualified, will make a huge difference in the lives of individuals, their families, and on society as a whole.

Because of the growing need for long-term care insurance, the wide array of available products makes it a must-have for all portfolios. State partnership has proven to be a wonderful addition to the formula, as people can safeguard assets, establish and protect financial legacies, and still enjoy the much-needed care they will likely need at the end of their life.

Private long term care insurance is an economical way for individuals and couples to protect their savings and provide themselves with a variety of options regarding their long term care. It allows them to pay for these services without exhausting their retirement assets or family savings. It also affords them choice as to where they wish to receive these services. A partnership-qualified plan further allows them to safeguard, on a dollar-for-dollar basis, a portion of their estate equal to the amount of money disbursed by the issuing carrier on a reimbursement basis.

Reference:

1. A Precarious Existence: How Today’s Retirees Are Financially Faring in Retirement, TransAmerica Center for Retirement Studies, December 2018, https://www.transamericacenter.org/docs/default-source/retirees-survey/tcrs2018_sr_retirees_survey_financially_faring.pdf.
2. Projections of Risk of Needing Long-Term Services and Supports at Ages 65 and Older, U.S. Department of Health and Human Services, January 2021, https://aspe.hhs.gov/sites/default/files/private/pdf/265136/LTSSRisk.pdf.
3. WA Cares Fund, 2021, https://wacaresfund.wa.gov/about-the-wa-cares-fund/.
4. Washington State Retools First-in-the-Nation Long-Term Care Benefit, Kaiser Health News, April 2022, https://khn.org/news/article/washington-state-retools-first-in-the-nation-long-term-care-benefit/.
5. 2022 Milliman Long Term Care Insurance Survey, Broker World Magazine, July 2022, https://brokerworldmag.com/2022-milliman-long-term-care-insurance-survey/.
6. American Association for Long-Term Care Insurance, March 2014, https://www.aaltci.org/long-term-care-insurance/learning-center/long-term-care-insurance-partnership-plans.php.
7. The Effective Date is the date the U.S. Department of Health & Human Services approved the state plan amendment. Original Partnership indicates one of the four original partnership states.
8. Policy Reciprocity indicates whether the state will honor partnership policies from other DRA partnership states when it comes to allowing asset disregard when filing for Medicaid. All DRA states plus New York, Indiana, and Connecticut have reciprocity. California does not.
9. LTC Insurance and Medicare Supplement Executive Summary, Annual 2002, LIMRA International.

In our previous article we talked about the importance that marketing events can play in the creation of selling opportunities. Notice that we refer to selling opportunities and not to “appointments” or “leads.” Selling opportunities are so much better than leads or simply appointments. Our experience is that you will close virtually one hundred percent of those who are health qualified with a significantly higher placement rate as well. It all starts with the relationship that you start to build when they attend your marketing event.

It is important to remember that these marketing events are really client appreciation and client development events and not merely public events. In the past week alone, my wife and I combined received five invitations to public events from financial planners or law firms interested in soliciting us as their clients. While the restaurants are tempting, we have no desire to attend these events. However, there are a great number of people who will attend these events. Some of them attend every event they are invited to, and for that reason we have good-naturedly dubbed them professional “plate lickers.” We do not want to engage with these people because with their attendance they literally and figuratively consume valuable marketing dollars and your time with no intention of ever utilizing your services.

Hindsight being 20/20, it is easy to look back on what did and did not make our marketing events both memorable and profitable. After years of conducting these events, debriefing them afterwards, and compiling a list of lessons learned, here are a few of the key learnings that we have filed away.

Key points regarding client events:

• Think outside the box—in terms of the audience you wish to draw, the variety of topics you may wish to offer—keep it fresh for your clients and yourself by varying the venue. We had one client who attended no less than seven of our events in one calendar year, dutifully bringing a different couple to each event, resulting in over $35,000 in premium (2011 dollars). In terms of topics, for whatever reason, any time we invited someone from the Social Security Administration as a guest speaker, we packed the hall. As people are nearing retirement age, they want this interaction with someone who can answer their questions.
• Invite both your clients (to show genuine appreciation) and to expose them to your strategic partner’s practice, and their friends (for potential growth) and of course your strategic partner’s clients and their friends for the same reasons. The gentleman I referenced in the previous paragraph would “talk people up” about the benefits of buying a long term care policy while they are young and healthy during the dinner portion of the event. He more than earned every meal he consumed!
• You want to conduct events that have an extended “shelf life.” While dinner events at popular restaurants will never go out of style, creating an experience for the client will pay dividends well into the future. One such event that I had to be convinced was worth the investment of our time and money was an event where all participants would be invited to learn the art of sushi making. For months after the event I would receive texts, emails, or phone calls from those who had been in attendance, telling me how much they enjoyed the opportunity to acquire the skill, how much fun they have had sharing their newfound expertise with friends and family, and how “Every time I eat sushi, I think of you guys!” Can an event have any more desired outcome? Other memorable events that we put on included sponsoring a chef’s private table, golf lessons from a professional, and of course catered events on a 42-foot Chris-Craft as we cruised Lake Michigan and/or the Chicago river, affording guests the opportunity to view the Chicago skyline. One of the more outside the box events we sponsored was an after-hours event at a jewelry store, where attendees could receive free appraisals and cleaning of their jewelry, and enjoy a chocolate fountain. To this day I marvel at the business that this event produced for us. Fishing trips, special sporting events, and anything you think would be entertaining become memorable events if you take the time to plan it right.
• In a nutshell, make the events fun and memorable so that when people encounter something in their regular life, such as eating sushi, they think of the time that their advisor team created an environment in which they learned how to make it. They will share these experiences with their family and friends, and referrals will follow. I did receive a phone call from the friend of a client who called me solely to be “put on the list” for one of our next “fun” events. They later became clients as well.

Key considerations of client events:

• They are a lot of work!
• Consistency and regularity are absolute musts.
• Use a calendar and plan your events out for the next 180 days. Reserve desired venues. Nothing is more frustrating than to have a great idea and to be frozen out of a desired venue.
• If you are conducting an event with a strategic partner, be prepared to manage the relationship. Odds are you will have to be the professional planner in the relationship.
• Establish and follow a process and timeline that you can reduce to a checklist.
• Ask your agency to help promote and support the events either financially or with personnel support. If you have five tables of eight that is forty people and probably 20-25 households when you account for couples and singles in attendance. You want a host at each table, and you want people to talk to them as they mill around at the end of the event and you are encouraging them to sign up for appointments later that week.
• To this end, I liked to do events on Monday and Tuesday evenings, so that we could encourage them to sign up for appointments over the remainder of the week. Their interest in seeing you is never going to be higher than at the conclusion of the event. You have planted the seeds, so we want to see them as soon as possible and to get them to the end of the buying cycle as soon as possible.

For agency managers and marketing leaders:

• Plan events that will facilitate the launch of new agents utilizing their Project 100 lists.
• Get involved with your local Chamber of Commerce and host events for fellow chamber members.
• Encourage agents to partner with other agents in your firm, particularly if they have complementary skills to one another.
• Leverage the success of these events to promote more events.
• Get potential new agents to buy in to these events during the recruiting process.
• Use existing resources as much as possible.
• For those agency leaders who struggle with getting their producers to adopt this time-tested business practice, remember that as leaders you must “Know it, Model It, and Be Involved.”
• First line supervisors must be able to “apply it and monitor it,” and the best way to do this is to be modeling the way with your own events.
• As always, a best practice includes tracking activity and success, debriefing events, and looking for ways to improve the process.

Additional networking opportunities through the strategic alliance partner

• Who do they know?
• Have them make personal introductions to their own Centers of Influence that can help you mutually expand your long term care sphere of influence.
• Health Benefits Brokers—the new wave. We have found that this is especially important when dealing in the business-to-business (B2B) arena, where even after you have convinced the decision maker of the business that long term care makes sense for the company and the individual employee, he will often default to “Let me check with my benefits person.” Rather than being frozen out, it is so much easier if the benefits broker is the one making the introduction and opening the door for you. We enjoyed great success by partnering with a health benefits broker and sponsoring these types of events.

Concluding thoughts on formal and informal marketing events:

• Marketing must become part of your lifestyle and DNA, and not remain just a series of separate events in which you occasionally participate.
• Just do it!
• Face and conquer your fears.
• Talk to everybody about what you do! Have fun!
• Have an elevator speech that flows off your tongue and that prompts questions from those with whom you are speaking.
• “I help people protect their financial futures…” How?
• “I am a long term care planning specialist.” What is that?
• “I educate people on their options for safeguarding themselves and their families against the ravages of long term care and of outliving their money.” How do you do that? Can you help me do that?
• “I can protect your future.” Oh really. How can you do that?
• “I help people plan for the events in life that they do not wish to talk about.”

To quote the Godfather II, “This is the business we have chosen.” Where you are right now is the business you chose for yourself. The key is to be both happy and successful in all your endeavors. In this day and age, marketing is the key to success.

Marketing does not need to be intimidating or expensive. These marketing events are fun to conduct, and it is a genuine rush when you walk out of these events with a paper calendar that contains selling opportunities in the guise of appointments that people have signed themselves up for over the next few days. Remember that in service industries such as ours, people have a choice as to whom they will work with and refer their friends and family to. For this reason, marketing is not an event, but rather a lifestyle. Embrace it, and you will enjoy tremendous success.

You are now firmly established in a relationship with your strategic partner, having established a firm business and marketing plan on how to reach out to their existing and potential client base. So, what is next?

There is an absolute kaleidoscope of materials available for use in marketing your products. These include client letters, newsletters, phone calls, email drip campaigns, and our favorite, marketing events. The beauty of marketing to our clients and those of our centers of influence and strategic alliance partners is that we can do what we want to do and write it off our taxes as legitimate business expenses. One of our former advocates had been a member of the Professional Golfers Association (PGA) but was forced to leave the tour when he became a full time caregiver to his mother. Subsequent to her death, he became a passionate LTCI advocate, and combined his passions for golf and insurance by working with a State Golfing Association and putting on workshops at local golf clubs throughout the state. We contributed dollars utilized to fund junior scholarships in exchange for their efforts in filling seats at our workshop events. It was truly a win-win-win scenario as those in attendance would sign up for a needs analysis with a member of our team. This was a perfect cohort to market to because they had the requisite health and wealth by virtue of their participation with golf, and after our workshop were usually very motivated to see us.

“Marketing is nothing more than doing all the fun things that you enjoy and inviting your clients to join you. The best part is that you can then deduct it as a business expense.”

The keys to any successful marketing strategy are:

• Consistency in both planning and execution. Plan the work and then work the plan.
• Determining a master marketing strategy and establishing a timeline for implementation.
• Develop or acquire materials that suit your marketing purposes.
• Conduct events that clients find attractive, relevant, and of interest to them.

As we noted earlier, the critical aspect of your professional partner’s role is the management of client relations. Ideally the advisor is in regular communications with his client base, and as a matter of course is conveying ideas regarding products, plans, and strategies. Quite often with long term care insurance and similar products they may be at a loss as to how to do this in an effective manner. To this end, a letter such as the following may be a natural way for the advisor to introduce the concept to his clients.

The Initial Client Letter

[Advisor letterhead]

[Client Name] [Date]
[Address]
[City, State, Zip]

Dear [Client]
It is an immense pleasure working with you to plan your financial future and to maximize your assets. I feel confident that we have established the financial plan best tailored to your needs and wishes for the years to come.

I have become increasingly aware of the financial and emotional risk facing my clients over the age of fifty…namely, the high costs associated with long term care. Most of us know someone who is receiving care at home, in assisted living, or other long term care facility. I had hoped the Federal Government would include long term care in the 1996 Health Insurance Portability and Accountability Act and in subsequent legislation. Some progress has been made in the availability of Partnership plans in a number of states, but the accompanying cuts in Medicaid means that this problem largely remains the responsibility of each of us to look out for ourselves and for those we care about.

An increasing number of my clients are concerned about this risk. It was reported by the Federal Government’s Agency for Health Care Policy and Research that seven out of ten couples, reaching age sixty-five, can expect at least one partner to use a nursing home sometime before the end of their life. Depending on where you choose to receive care and the quality of care that you require, the annual cost of an extended stay in a nursing home will range from $90,000 to $140,000 per year! With the stay in care averaging over 2.8 years, this amounts to a substantial reduction of your principal investments. Is it any wonder most retirees count outliving their resources as their greatest fear?

A more recent study reports that almost half (48%) of patients currently in skilled nursing homes do not require such a high level of care and need not be in a nursing home! Which brings me to the most important point associated with this critical planning: The value of assuring one’s ability to “age-in-place,” to stay in the comfort of your own home, avoid overwhelming caregiving costs, and maintain choice and control of your own destiny.

After a lot of research, I have found a dependable solution to this problem. I am proud to be able to offer the services of agent name. Mr./Ms. , and his staff of professional long term care advocates, know all about the different types of care and the products available that cover this kind of risk. What impresses me most about Don and his staff is their ability to explain the complexities of the plan in understandable terms, as well as to tailor a plan to fit the needs of the people that they are consulting with at that time. After spending some time with Don or one of his associates you will have the information you need to make an informed decision on whether or not long term care insurance coverage is appropriate for you. We also have a wide range of product offerings available to tailor to your specific wants, needs, and desires.

This is such an important issue to you, that I have asked , a member of my staff, to give you a call within the next two weeks to set up a time for Don or a member of his staff to meet with you for a Needs Analysis. Everyone associated with Don is a true professional on this subject, and better informed than I am about the options available to cover this imposing risk to your financial future.

Don and his staff have my highest recommendation, and we are proud to consider them as trusted associates in serving you and your needs. You will be able to trust his professional guidance in making the best decision for your particular circumstances. I strongly encourage you to take advantage of this opportunity to safeguard the future of you and your family.

Sincerely,
[Your signature block]

P.S. If you choose not to meet with Don or a member of his staff for any reason, please return this letter to me so that we will know that you have considered this advice, and that we may update your file accordingly.

TO: [your name]
Thank you for your attention, and kind recommendation to consider long term care insurance at this time. We expressly decline to meet with [your name] at this time to discuss long term care insurance coverage and understand the potential financial ramifications of this decision.

Client Signature(s)

While a letter such as this will provide some level of defense for the advisor in the event a long term care crisis arises, and they themselves become a target of an ever growing and successful plaintiff’s bar, we obviously prefer to be proactive and positive by providing protection to the client rather than merely a “CYA” type letter for inclusion in the client file.

The intent of this letter is to serve as a warm introduction of the concept of long term care insurance, you, and to pivot on the strength of the relationship that the advisor enjoys with her clients.

As previously noted, we also encourage you and your new partner to sponsor joint events to which you can invite your own clients as a sign of appreciation but also to encourage them to bring friends along in hopes of developing even more clients.

We have been raving fans of client events that are both tokens of appreciation to our existing clients and become referral events by virtue of our clients inviting their friends to accompany them to the event. We have found that if the venue is a nice restaurant that it is extremely easy to subliminally convince our clients to in turn “host” their friends at our events. As producers we were extremely successful at converting these guests into new clients which resulted in hundreds of thousands of dollars of new premium.

Take A-ways:

• Marketing events create awareness of our products and available solutions; agents complete the sale.
• It all starts with making your elevator speech part of who you are and what you do.
• Say “thank you” to those you know and get to know everyone you don’t know.
• “Every partnership requires either a Managing or General Partner to drive the ship. Accept the fact that in most cases this will be you.” —Don Levin

In the next article, we will address the key elements of building memorable marketing events.

“Vision without execution is hallucination.”
—Thomas Edison

In previous articles, we have addressed the process by which we can convert referrals to appointments with potential strategic partners by getting past the gatekeeper, engaging in meaningful conversations with the principal, and establishing mutual expectations.

As a result of these meaningful conversations the business plan is now complete, and you also know that your partner is committed to bringing the protection afforded by long term care insurance to her clients. We know how much money your partner would like to see the partnership generate, and it is now time to get down to brass tacks and to determine the how we are going to bring this product to market. Just as we always strive to do with our own regular clients, it is imperative that we are only setting aside our time for quality appointments.

By definition, a quality appointment is one in which the client(s) are health and wealth qualified, and eager to see us. In as much as they are working with a financial advisor/planner or elder law/estate planning attorney, we can generally assume that the financial aspect of qualification is not an issue. Let’s face it, even in the general population a lack of financial qualification represents a very small portion of our applicants who do not receive an offer of coverage from the carriers.

You will have to decide to what degree you want your partner or her staff to pre-qualify the health of your prospective applicants. We would recommend that this review at least cover the “knock out questions” so that you a) do not waste your time or theirs, and, b) you walk into the interview with some idea of what products, and, c) what carriers would be appropriate.

The last element, the “eager to see you” part, is completely dependent upon how the interview is positioned by the advisor and how he or she creates the appropriate level of urgency. To this end, they must feel the urgency to have you meet with their clients. Naturally, this is based on their personal commitment to the protection afforded by long term care insurance products.

The first logistical challenge is in numbers. First, ascertain how many clients they have and, if an older advisor, how much longer they plan on working. That may sound odd, but the age of the average producer in the industry today is creeping upwards of 59, and managers north of 64. For this reason you want to do some math together to determine over what period you are going to see these people.

Next, do they have clients to be immediately “cherry-picked,” e.g., ready to purchase, already in the buying cycle, or expressing a predisposition to our products because of family experience or their own health concerns? If so, you will want to have them contact these clients and schedule an appointment as soon as possible. The success of writing business will serve as an adrenaline boost to them and will enhance their commitment to establishing more selling opportunities for you both.

In terms of organizing the campaign, if they have a sizable base of clients, another way to create urgency is to use birthdays as a trigger for initiating contact with the client. The fact that we can often “save age” on these age-attained products is another way to create urgency in both the advisor and the client in scheduling an appointment sooner rather than later.

Another means by which to create urgency in the advisor is to demonstrate that we can help them substantiate their ongoing value to their clients and help retain them by being that added dimension of service that can serve to differentiate the advisor from the myriad of other advisors with whom they compete on a daily basis.

It is also crucial to constantly be reminding your partner that you are not a “one man band,” and that you actually bring an entire organization to the table with depth in all areas to include, but not limited to, marketing, service, training, compliance, and the capacity to enhance his or her stature with their clients as well as potential new clients that you both may garner in the course of client appreciation/referral events.

As the LTCI Planning Advocate responsible for the point-of-sale activity, we cannot emphasize enough the importance of constantly managing the relationship. In other words, “out of sight, out of mind” will definitely apply here. You need to have a strong presence in his or her office at the beginning so that the urgency they feel does not wane, just as we have to safeguard that a client’s urgency does not ebb and flow as it is prone to do during the buying cycle.

In this series of articles we have endeavored to keep the “How To” of the process simple and straightforward and would encourage you to do the same.

• Keep the process simple and in front of your partner as often as possible.
• Review the desired methodology again and again—it is critical that your partner manages the client relationship—this is how he/she earns his/her portion of the sale.
• Establish a timeline of events that need to occur in order for this process to be successfully launched and be replicable on an ongoing basis.
• It is imperative that you completely map out the campaign launch and attach firm dates, especially if the nature of your partner’s primary business, e.g., the impact of tax season on a CPA or investment advisor, could be an obstacle to a successful launch.

Additional thoughts:

• Communication is always the critical element. At the beginning it will dictate whether you ever get off the ground in your budding relationship. Once you have business in the pipeline, it is important to keep your partner informed during the pendency of the application so that if the client reaches out to them for an update they will appear as if in control and knowledgeable.
• The key is to get them engaged and the pipeline primed, so a new potential income stream can begin for their business. Additionally, they feel both the gratitude and professional admiration from their clients as they close this exposed flank in their financial defenses.
• Working with Centers of Influence is an endless source of referrals and needs to be carefully cultivated and cared for as one would a fragile garden.

In our experience, the actual marketing of our services to your partner’s clients is both rewarding and a lot of fun if you establish a plan and then execute on the plan. These marketing activities can be traditional in the form of letters, emails, newsletters, telephone calls, or non-traditional in the form of social events. We would encourage you to really think outside the box and consider activities that have a long “shelf life” and that will help you grow your business exponentially by having your first generation clients become your personal marketers! The key is to adopt a methodology that both of you are comfortable with employing to bring clients in that maximizes the relationship that the financial professional has with her clients. Initially it may be by utilizing her ongoing methods of communication to include letters, emails, and phone calls, but hopefully will progress to face-to-face interviews and appointments (ideally) conducted in the financial professional’s office—or via Zoom, as this methodology has exploded in popularity especially during the COVID-19 pandemic.

The initial tone utilized by the advisor is critical. She should strive to identify the problem of long term care as it applies to the public and to the individual client and their family, the inherent risks associated with it, and then propose a potential solution: You. This effort also allows the advisor to create a layer of insulation against potential liability by asking the client for an affirmation that they have been advised about the product and services that you can provide and that they are expressly declining the opportunity to meet with you. A sample letter such as the one found in next month’s article is one that could be utilized. (Note: While you can provide this letter as a sample for the advisor to utilize, we strongly encourage you to have it complied not only by the advisor’s compliance department but yours as well, given that you and/or your company are being mentioned by name. When in doubt, have it reviewed!)

As previously noted, we would encourage you to really think outside the box and consider activities that have a long “shelf life” and that will help you grow your business exponentially by having your first-generation clients become your personal marketers! There is no greater marketing mechanism than satisfied clients who wish to share you with their friends, family, and business associates. In a future article we will share a wide range of such marketing events.

Take A-ways:

• Over communicate with your partner throughout the entire relationship.
• These clients belong to your partner. The partner has always had all the answers; feed them the information they need to continue this important relationship.
• Plan the work and work the plan—often.
• Think outside the box when it comes to marketing…and have fun with it!
• It is imperative that the client relationship be managed by the professional partner.
• All professionals will welcome additional clients—your job is to help them grow their business. Nothing will solidify your relationship quicker than referring them to a new client.

(Fourth in a series)

Last month we talked about the first meeting between you and your prospective strategic partner. The first meeting was all about getting to know one another and determining whether there is synergy between the two of you. Remember you want to integrate your service into his and not disrupt their core business. If there is sufficient reason to believe that this is potentially a strong match, and that a working relationship can be established, set up the second meeting.

The second meeting is all about establishing the ground rules of the relationship and determining who will take on what portion of the workload. This is a key element in determining whether this relationship is going to flourish as desired or wither on the vine.

Once you find yourself in the second meeting with your interested professional partner prospect you need to discuss how the process will work in terms of marketing to their clients; setting the client appointments, conducting the appointments, communication back to the firm about their clients on a weekly basis, and the tracking system used to follow the applications to policy issue.

As a result, the following are the key questions that must be addressed during the second interview:

• How is the business owner going to let the clients know about this new service? (Note: We will discuss marketing in a later article dedicated to the Mechanics of the Marketing Plan, and the most effective way to get clients out of the file cabinet or computer database and to a home or office interview.)
• Who will be the Champion at the firm that will be responsible for the ultimate success or failure of their new senior services venture?
• Who will be available and accountable to us during the initial launch and on an ongoing basis after launch? Most firms will appoint one person to be the driver of the new business and that person would hold the other people/employees in the firm accountable.

In some firms, it is solely the owner who contacts clients and meets with them to review their accounts and financial plans, while in other firms there may be an accounts manager or assistant who maintains this relationship and will be the person in contact with the clients and arranging the interviews. In other firms, communications may be in the form of newsletters, updates, email, or conventional letters that serve as an invitation to the client to come in for an appointment.

Because you are going to become an integral part of the advisor’s professional staff, it is imperative that the professional partner has a person designated to manage the calendar of the long term care agent’s availability each week or month especially in those cases where there are multiple advisors in the same office all of whom may be looking to book appointments with only one agent. To accomplish this, we recommend some form of calendar sharing program where administrative people can view the one shared calendar and book appointments.

While the use of a shared calendar software may sound like an overly obvious thing to mention, we have found that “the devil is in the details” and this is one aspect of the relationship that you always want to go smoothly so as not to become a source of embarrassment for either one of you if multiple appointments are scheduled in conflict with one another.

In addition to scheduling actual (selling) appointments, it is also important to establish ground rules regarding what is going to be a governing and acceptable response time to one another. Often there will be issues which require joint decisions that will enable the partnership to move forward and to flourish. Both parties need to be comfortable with the parameters that are selected. The parties need to be mutually respectful and return one another’s emails and phone calls within 24 hours to keep the service at a level geared to serving the client most efficiently.

If you plan to deliver a series of seminars, workshops, or client appreciation/referral events, it is especially important to establish firm ground rules and to delineate responsibilities for all of the actions necessary for these events to be properly planned and executed. We cannot stress enough the importance attached to the use of a comprehensive checklist which identifies all tasks and the person who will bear the responsibility for each task. These tasks may include:

• Who is going to bear the costs associated with the activity;
• The coordination that usually will begin approximately twelve weeks out for each activity;
• Site selection;
• The program or activity content;
• Materials to be utilized;
• Compliance approval for materials to include invitations; and,
• The ancillary follow-up with all attendee’s and materials that will be utilized.

Other issues to be addressed and identified:

• Who will call the clients and introduce the new service?
• Who has the best relationship with the client at that firm?
• Will the partners or the staff call?
• Identifying when invitations will be made. Most owners have close contact with between 50 and 100 clients, which is a nice start but certainly is only the tip of the iceberg in firms with 1000 clients or more. What happens to the other 900 clients the owner knows, but does not have that strong of a relationship with?
• Accordingly, how many customers does this firm have to contact that have health, income, and assets suitable for a long term care preservation product?

As we venture deeper into larger firms with multiple advisors, and often multiple levels of advisors, it is imperative that everyone shares the same mutual expectations and level of commitment. If this does not occur, you may find yourself bitterly disappointed. For example, if each of six partners at the firm has one thousand clients, you would logically assume that you would have access to six thousand clients. You will only have access to each partner’s clients if that partner has bought into our business model. What you may experience is that one or two partners of a multi partner firm will join your cause. If they have success and it doesn’t cost the other partners a loss of clients or provides them with an increased revenue stream without an ancillary time drain, they may join you as well later. They will send the partners over the hill first and if they do not have arrows in them when they return you may have a shot at working with them.

The servicing planner or long term care agent needs to keep the owner and other participants supplied with current information each week on their clientele. This failure to communicate is why most relationships do not successfully launch or survive past the first couple of client referrals. If we take a moment and place ourselves in the shoes of the professional partner, we see that he is agreeing to enter into a partnership with another professional who is going to be a total reflection on him. We are asking him to trust a third party to work with his clients. We must be respectful of them, as they must be respectful of our clients that we refer to them, as we mutually build a larger client base. We must control the delivery of information through answering questions or researching answers for the clients. If and when clients call the partner to discuss the planning you have done for them, make sure the partner is apprised of what is going on with that case or he or she may be cast in a poor light that is not going to benefit either one of you. If the partner is ever in the position where he or she has to tell the client “I do not know, I need to call my specialist,” not only is that an extra step, but it also creates stress which may lead the partner to determine that the relationship is not to his liking. He will soon feel it to be a burden that he will rid himself of by stopping the referral process, and usually the agent never knows what went wrong.

The second appointment should also be used to manage expectations and establish a timeline that all agree to honor. The timeline should consist of milestones and dates of completion which will be checked off before launch. Items to be addressed include:

• Any potential insurance state licensing;
• Any state mandated LTCI partnership courses;
• Appointment process from the insurance company;
• The length of time the firm will require to profile their data base with clients to call about our new service; and,
• The length of time to deal with any requisite compliance issues such as materials that are to be utilized with the marketing portion of the program.

At the same time, unless you are subject to an umbrella contract that binds both you and the partner, you should also address what the profit sharing for you and the firm and the firms planners looks like, who will be the lead champion at the firm to drive the success of the new program, how many partners are going to be involved, and other important elements the firms need to make the other partner firm work with their existing dynamics. The financial aspect of the relationship and what a potential split looks like will be addressed in a later chapter.

Marketing to professionals is incredibly rewarding and is a great way to exponentially expand the scope of your individual business and allow you to leverage yourself in ways you may not have previously considered. While it is rewarding, and the pros far outweigh the cons, be mindful of the fact that most professionals are very territorial and fear that you may directly or indirectly compromise the relationship that they enjoy with their clients. Therefore it is imperative that you establish, upfront, the scope of your relationship, e.g. you will only talk to the client about long term care insurance or a hybrid life insurance product that contains a long term care rider, and be subject to a non-compete as it applies to all other products. Other challenges include having to manage around the various egos you will encounter, as well as the need to make everyone feel good about going into business together. You will be engaged in a solid relationship if the decision makers do not need to be right all the time and, more importantly, if they can listen and learn about new ways to succeed that we have already proven in our field as we have served our own clients.

You want to integrate a system for each firm so it works for them. Do not plan on each firm doing things the same way. While a good bit of what we are addressing is easily replicable, the nature of relationships will dictate the manner in which you may have to modify your agreement. The good news is we can be versatile and integrate into most firms in the country and help as many clients in the senior planning areas of asset preservation and income preservation, as well as providing independence, control, and quality healthcare later in life.

Take Aways:

• Each firm has its own identity and culture. Never forget this fact. We need to integrate ourselves into their space.
• This is a business process—know it and respect it.
• Life and business is all about commitments. Both parties must honor them.