“Common sense is the knack of seeing things as they are and doing things as they ought to be done.” -Josh Billings

Author’s Note: Much of this article will be an interview/exploration of long term care insurance best practices with Susan Blais, an experienced long term care insurance advisor. Full disclosure, Susan is the author’s spouse.

When Broker World’s fearless publisher asked me to discuss best practices in long term care planning, my mind ran through the countless regulatory efforts made over the past three decades to address these issues. I am a veteran of California’s long term care insurance reform in the 1990s and 2000s. This included being a volunteer advocate for CAHU, representative to the Department of Insurance Agents and Brokers Advisory Committee and member of the Curriculum Board. As such I have spent countless hours explaining the advisor’s job with consumers to legislators, regulators, and “consumer advocates.”

Laws and regulations designed to manage our behavior are generally retroactive reactions to remedy a wrong committed by a small handful of “bad actors” who prey on the public. In my experience, most agents bend over backwards to advise their clients in a professional manner. New York Insurance Regulation 187, coming in some form to your state of residence, is a significant effort to impose a standard of conduct on insurance agents and insurers. While not specific to long term care insurance, by virtue of the fact that most planning solutions in chronic illness/long term care are now attached to life insurance products, agents need to expand their fluency to a growing variety of options.

As someone not directly engaged in the sale of long term care insurance, allow me to turn to someone who is.

Question: Susan, please take a moment to tell Broker World readers why, after we sold our brokerage agency in 2013, you decided to re-enter the business as a personal producer.

Since retirement doesn’t appeal to me yet, and I personally witnessed many people dealing with long term care events, I decided to go into personal production. Apparently there aren’t as many experts in long term care planning today as there were a few years ago, and I saw a definite need to promote this essential product to the public. I’ve been finding clients by partnering with property and casualty agents and financial planners, and by advertising on venues that have the right audience demographics.

Question: In reviewing Regulation 187, the issues that seem most relevant to agents/advisors in long term care planning include: Suitability, recommendation, replacement, best interest of the consumer and record keeping. I know you spend a great deal of time with each prospect before they become a client. What sort of fact-finding and suitability triage do you utilize?

I have a basic fact-finder which I’ve amended over time to reflect changes in product offerings and underwriting requirements. The document includes questions about the client’s demographics including business ownership, medical history, family history, and financial income and assets, including existing insurance policies which may be candidates for exchange or upgrade to policies that include long term care or critical illness protection.

I also give a short overview of long term care and the various “branches” of insurance options available, including traditional LTCI and hybrids of life insurance or annuities with LTC/CI riders. I ask about the client’s general risk profile, and how they approach other types of insurance they own, to determine whether they are likely to prefer comprehensive coverage or more limited coverage to bridge a gap between their own assets and a potential need for extended care.

From this conversation I often get a good idea of where to start with a small set of options, meaning different benefit/premium combinations and types of coverage, and set the second meeting where I give an overview of the different types of coverage and how they work.

As the client gets a deeper understanding of the options, they begin steering the conversation to those that appeal to them and I use a sifting process until we come to the right combination of benefits and premiums that the client selects and is comfortable with. By then the recommendation is easy because the client has identified the options that make most sense to them. It usually takes three or four meetings to get to this point, and I use Zoom so I can walk clients through illustrations visually and then email them the documents after the meeting. When the clients are ready to apply, we do it on a Zoom meeting with an online application and electronic signatures. I’ve been doing this for years so I didn’t have to change anything when COVID-19 came along except to add a few questions about international travel and contact with COVID-19 positive individuals.

Question: How do you go about explaining the different long term care insurance planning options? For instance, while there is a shrinking number of traditional stand-alone options, on the life insurance side you’re faced with 101(g) versus 7702(B), chronic illness accelerated benefit riders that don’t all work the same and extension of benefit riders that use different methods of payment. How do you sort through all the clutter?

I start with a basic overview of long-term care as stated above, then explain traditional LTCI as similar to homeowners insurance, where you pay premiums for decades and hope you never have a fire or other disaster which wrecks your home. While it is always prudent to get insurance done, but you would also need to have your fire risk assessment done for the building! For insurance, generally, you never get the premiums back, but you’re glad you had the coverage if you ever need it. Then I contrast this to hybrid policies in general-where someone will always get a benefit-either you because you need extended care while you’re alive or your beneficiaries after you die. I explain that the hybrids are generally more expensive because they cover two risks: The death benefit and payment for extended care if you need it while you’re alive.

This simple explanation often leads clients to express a preference for one over the other. I prepare a few options to show them at our next meeting so they can see the difference for themselves. This leads them to choose either traditional or hybrid, especially after reviewing the cost of each. If they select hybrids, I’ll explain the different types available and show them examples of how they work. I have a few favorite carriers I use for this because it’s easy to show the differences in how they work. I always explain the pros and the cons of each option so the client can make an informed decision.

Another key factor of suitability is the affordability and stability of premium payment. High-net-worth individuals tend to favor single-premium or ten-pay options, and often prefer a hybrid where they can see the cash value and maintain some control of the asset. The clients who ask about monthly premium are at the other end of the spectrum, and we spend time finding a premium level they’ll be able to maintain after they stop working.

Question: With the ability to 1035 Exchange cash value from an existing life policy without a chronic illness/long term care benefit, policy review and potential replacement become an option for the consumer to “upgrade” their coverage. How are you approaching this aspect of the planning discussion?

In the initial fact-finding session I gather information on all life insurance policies and annuities the clients own and do a brief policy review to see if each product continues to serve the purpose for which they purchased it. In many cases the clients are willing to look at exchanging current policies for those that include long term care or critical illness riders because their children are now grown or they don’t need the same amount of life coverage they originally did. Using the cash value in such policies can allow clients to upgrade their existing coverage with a minimal premium expenditure. And it gives them peace of mind knowing they’re protected if they should need extended care in the future.

Question: What tools have you employed in your practice to keep notes and maintain records?

I use a hard copy fact-finder when speaking with clients on the first call because I can hand write notes and check boxes faster than on the computer. I scan the completed fact-finder into the client file and input the data into SalesForce, which is customized for my specific use. I can’t recommend SalesForce highly enough, as it is HIPAA-compliant and keeps me organized because I can keep all documentation about each client in one place.

I also use a fairly new email provider called Paubox, which provides HIPAA-compliant security without the use of passwords or links for a client to access their information. Emails are transmitted exactly as usual, but include a flag which shows they are secure. Client replies to my emails are also secure, and therefore sensitive information can be passed between us without concern.

The third software I use is called Match My Email, which automatically takes emails to and from my clients who have a record in Salesforce and adds the emails to their records every few hours. The combination of these three tools helps me stay on track and ensure my client’s information is safe and “on the record.”

Question: “Best interest” seems to be common sense and something that all agents/advisors can readily get behind. On the other hand, as I used to tell legislators, regulators and “consumer advocates” back in the 1990s and 2000s, if an agent were to conform to every aspect of the insurance code they would spend unending hours with a prospect paralyzing them with minutia. Clearly a balance needs to be struck. What advice can you recommend?

In the 35 years I’ve been in the insurance business, with health insurance carriers, as a wholesaler and now as a personal producer, I’ve met very few agents who didn’t put their clients’ best interest first. Personally I never recommend a product to a client I wouldn’t buy myself, and I spend lots of time on the issue of affordability. In the case of long term care insurance, where a client may be paying premiums until they die or go on claim, we discuss whether premiums will be affordable after retirement and specifically where the client expects to get funds to pay premiums for that long. There’s no reason to begin paying on a policy they cannot maintain until they need it.

The sorting process I use to get a client to the right combination of benefits and premiums for them has held true for many years and I expect it will continue to do so. To me it’s a matter of gathering facts, interpreting the data, and making the best estimate of what is best for a client based on their needs, desires, and limitations at the time of purchase. If we as professionals keep our client’s best interest in the forefront of the whole process, which I’m sure we do, then I believe we have met both the letter and the spirit of the law.

That said, it’s important to keep good notes from client meetings and to do most communication by email so records are maintained for the long term. When I send clients their copies of illustrations after a meeting, I also include some of their comments about which products they found desirable and why. This prevents misunderstandings and keeps an effective trail of our discussions so I can show the significant due diligence I do with every client, taking their feedback into account.

I may go overboard giving clients full disclosure of the pros and cons of various options, but I feel it’s my duty to clearly outline the facts so their decision is an informed one. I prefer to spend time with clients to ensure they understand what they’re getting, and so far I’ve never had a client complain that I pushed them into a decision. I take great satisfaction in that, and sleep well at night knowing I focus on finding the right match for each client. I may lose a few sales that a more aggressive sales approach would close, but that’s okay with me. Clients I thought were lost often come back months later, ready to purchase. Respecting a client’s decision-making process and timing is important.

Thanks Susan. All great advice.

Undoubtedly regulators will continue to find ways to oversee agent/advisor practices in this changing and developing world of financial instruments designed to help consumers plan for their future. As Susan has demonstrated, operating in the best interest of your clients takes time, education, training, tools, and a whole lot of common sense. Ralph Waldo Emerson wrote, “Nothing astonishes men so much as common sense and plain dealing.” Indeed! Great words to live by.