Where does the money come from to pay for the care when someone needs long term care? Whether done decades in advance or in a crisis, planning is necessary to properly fund this care.
Although I’ve been in the long term care industry since 1991, I have learned that though I may have been a long term care insurance expert, I did not know all the different ways people can choose to pay for their long term care.
Back in the early 1990’s the long term care industry was defined solely by long term care insurance. Those days are long gone. Does your practice reflect this reality?
I know I was not alone in my myopic approach to long term care planning. Now, I hear every day from professionals who want to understand the true, complete landscape of planning options.
There are many ways to pay for long term care. You’ve heard about “combos” (I really don’t like that term) or “hybrids”, where long term care benefits are coupled, sometimes leveraged, in concert with a life insurance policy. This new category of insurance products is the fastest growing type of product being purchased in the long term care industry today. Do you know all of the different types of policies and how they work? Even the ones that are available on a group chassis through an employer offering on a guaranteed issue basis?
What about short term care products? Home health care only? Critical illness policies? Many critical illness events lead to long term care needs, and money from those policies can help cover costs incurred during a long term care insurance (LTCI) policy’s elimination period.
Then there are annuities. Deferred annuities are now adding long term care benefits to their base policy, some with extended long term care benefits or leverage. And medically underwritten immediate annuities are available for older clients who wish to convert an asset into income to pay for current long term care needs. The sicker the client is, the more leverage the client obtains in creating income.
Finally, there are non-insurance choices such as home care service contracts, life settlement plans and reverse mortgages. Do you know the six different ways a reverse mortgage can help a client pay for, or prepare for, long term care-whether it is for insurance protection or current long term care costs? If you didn’t know, it might be helpful to get in touch with a reverse mortgage broker who could shine some light on any questions you may have.
So What? What Does This Mean To You?
First, it means opportunity. Many agencies and producers will not go through the effort to learn, contract, market, and become proficient in offering all of the new funding solutions that are available. Has the long term care need gone away? Of course not.
Are baby boomers, the wealthiest generation in history, aging every day and inching closer and closer to the day they’ll need long term care services? Is their perception of that likely care need growing day by day? Absolutely.
The good news is this: as awareness of this need grows the solutions available to them have expanded–some with relaxed underwriting…or no underwriting at all!
Many agencies and producers built great businesses over the past 20 years focusing on selling long term care insurance. The next 20 years offers an even greater opportunity for those who are willing to put in the effort now to become an expert beyond traditional LTCI.
Is this approach harder than focusing on one product category? Absolutely. That is why only a few will do it-which means a great opportunity for those that do.
Second, it means work and commitment. If you really want to be a long term care expert in today’s industry, you have to learn, contract, market, and become proficient in offering all of the solutions that are available.
The reward and satisfaction that comes from being an expert are tremendous. Virtually every prospect you talk with-and every referral someone sends to you-will have at least one option to consider to privately pay for their long term care needs.
Why would any of us limit the long term care planning market to only the healthy and wealthy? And how uplifting will it be to know you have at least one solution to offer to almost everyone?
Third, it means applying a new planning approach to long term care funding. This is the most important point I want to make.
When you go to your doctor, he doesn’t just ask about one aspect of how you are functioning! He does a complete systems check on you, right?
How about financial planners? Ever complete their questionnaires so they can learn more about you? It is not just, “do you want to move your IRA over here for a better return?” Most important in that process are your goals.
And finally, what about estate planning attorneys? How much information do you give them when preparing to protect your assets and provide for your children and grandchildren? It is soup to nuts information about everything you own, your income sources, your family and what your goals are.
Shouldn’t the long term care planning process mirror the approach of other professionals?
I have surveyed many LTCI agents and asked what they do to prepare for an appointment. The answer I invariably receive is that they ask their prospect to complete a medical pre-qualification questionnaire. That is because almost all representatives that sell LTCI are focused on selling only long term care insurance, and they want to make sure their prospect has a chance to get LTCI issued. What about all the other products that are now available, and in some cases may be more attractive or more appropriate for your prospect?
Shouldn’t today’s long term care “expert” approach their prospect in much the same way that other professionals do? Shouldn’t we be taking a more planning approach to helping our soon-to-be-client in managing their long term care risks?
The planning approach means getting a complete picture of not only who our prospect is medically and financially, but what their family dynamics are, who advises them in decision making and, most important, what their goals regarding long term care planning are.
I suggest using a comprehensive questionnaire as a consistent guide in gathering information. In short, apply the long standing success principle of “First seek to understand, then seek to be understood.” Don’t go into a meeting with the prescription for the problem without first knowing the details around their long term care risks and what their goals are.
Even though sales of stand-alone LTCI are declining, the long term care industry is growing due to all of the new funding solutions. Yet there remains a significant gap between the number of professionals capable of offering the new solutions, and the public and other professional advisors that are interested in acquiring these options. How many families–and their legal and financial advisors–aren’t aware that their optimal long term care funding plan is just a phone call away–to a long term care planning expert? Will you receive that call?
The long term care industry has evolved. For those that want to also evolve their professions to become more of a long term care planning expert, not just a LTCI product expert, great opportunity lies ahead.
