NAIFA Takes The Fear Out Of Long Term Care

To kick off Long Term Care Awareness Month, NAIFA’s Limited and Extended Care Planning Center presented its “Don’t Be Scared of Long-Term Care” Impact Day on October 31. On the scariest day of the year, a variety of industry leaders shared their expertise to help take the fear out of long term care and the conversations surrounding it. This all-day virtual program was hosted by Carroll Golden, executive director, Centers of Excellence, and Zachary Huels, NAIFA’s Program Engagement manager.

Where there is fear there is opportunity. According to the U.S. Department of Health and Human Services, nearly 70 percent of retirees will need some type of long term care. With this tremendous need in mind, close to 580 attendees benefited from the insights of the expert panel.

The day began with Harlan Accola, National Reverse Mortgage director at Fairway Mortgage presenting “Homes are Not Mysterious Hideaways—They’re Assets!” Accola raised the following question concerning reverse mortgages: “What is the problem we’re solving?” You must first determine whether you are solving a long term care problem, a cash flow problem, or a tax problem to determine whether a reverse mortgage makes sense for an individual.

Accola stressed the importance of obtaining the reverse mortgage as soon as possible if it makes sense for the client. In the present environment, the client’s line of credit will grow faster than it ever has in the last twenty years.

Next on the program was Steve Cain, director Sales and Business Development Leader with LTCI Partners presenting “Why are We so Scared of Planning for LTC?” In his discussion of long term care client conversations, Cain focused on communication strategies to resolve the gulf between what clients need and their willingness to act.

According to Cain the older people get, the less they care about aging. “But you don’t fear aging in terms of getting older, it’s about health. It’s about, ‘I fear not being independent. I fear a catastrophic health event that I haven’t planned for.’” These fears create an opportunity to ask open-ended questions.

Cain then shifted focus to behavioral economics and bias. “Biases often make up a large part of irrational thinking and we must understand our clients’ biases.” The strongest bias is confirmation bias. “It’s our tendency to seek information that reinforces our positions or pre-existing beliefs.”

With so many challenges what can be done? Cain provided the following suggestions:

  • Communicate that the number one risk to your retirement is health care costs, not inflation. The biggest ticket health care expense in your retirement is long term care.
  • Use choice architecture framing and, despite the many long term care options, keep it simple. Narrow it down based on your fact finding to a couple of different insurance solutions, and then do a good, better, best framing ending with the optimal solution.
  • Focus on the possible gain versus the loss. The gain is that the client is going to gain peace of mind today if he or she plans along with a tax-free funding strategy.
  • Use stories not stats. Statistics destroy empathy. We all have stories that people can connect to.

On the legislative front, Golden was joined by co-presenter Maeghan Gale, policy director, Government Relations, NAIFA, and began their discussion of publicly funded state long term care programs, “Don’t Be Left in the Dark,” with a sobering statistic. While ten thousand baby boomers are turning sixty-five every day, only about seven percent own private long term care insurance. This is at a time when the cost of care is increasing dramatically.

States are now seeing that we are in a public health crisis. One result has been a public approach to long term care as represented by the WA Cares Fund in the state of Washington, slated to begin in July, 2023.

Golden described the nature of the long term care challenges that states are confronted with while Gale anticipated proposals emulating Washington’s program to be presented in a variety of states in the future. Gale added that NAIFA’s legislative team will be preparing for these in the coming legislative session. NAIFA is very supportive of the idea that public programs are designed to work with existing private coverage and not supplant private coverage.

To close, Gale discussed opt out windows, a time during which an individual who has previously purchased private coverage may opt out of a state long term care program. “I would expect that, as public programs come forward, there will be little to no opt out windows. So, as you’re having meetings and planning sessions with your clients, it is more imperative than ever to include long term care in that conversation.”

Completing the day’s first half, Jeff Levin assured participants that based on the data coming from the recent long term care survey conducted by OneAmerica, “You Won’t Spook Your Clients.” The survey results indicated that consumers appreciate when financial professionals talk with them about long term care. Interestingly, 69 percent of consumers with first-hand long term care experience from a close family member said that the care recipient’s planning wasn’t enough.

According to Levin, “It’s not that clients don’t want to talk about long term care. It’s that they don’t want to talk about being the person who may someday need care.”

Jeff Levin closed with advice on client conversations:

  • Ask clients to picture in their minds what it would look like if you needed long term care. Where are you? How is your care being received? Who are you surrounded by?
  • Don’t lead with long term care as being a health concern. Don’t even lead with long term care as being a need. Instead, reframe the conversation and make it about income.
  • Don’t argue with the contention from the client that he or she can pay for the care out of pocket. Instead, reframe by saying, “You probably could, but what if I could show you an effective way that creates greater efficiency and allows you to maintain access and control over your money and care?” Who wouldn’t want to have that kind of conversation?

In keeping with the Halloween theme Golden admonished the audience: “Don’t Let LTC Bury Your Clients in Worry and Debt.” Golden reinforced the day’s focus on communication, “People are afraid to even use the expression long term care, and they certainly have no idea what planning looks like.” To overcome this fear, the importance of using a formula to “talk about it (long-term care) without talking about it” was emphasized.

Golden drew from lessons in her new book, “How Not to Pull Your Family Apart,” explaining that this is a multi-generational issue and therefore must include multiple family members discussing multiple planning needs. To set families on the right track, she recommends a three-step process:

  1. Create a Care Guide
  2. Establish a Care Squad
  3. Determine the Care Planning Team

The Care Guide must involve the entire family and serves to counteract the “you don’t want to care for me” emotion on the part of the senior family member. “I don’t need to know every bit of your health history. We need to discover whether you have a Do Not Resuscitate in place or whether your will is up to date. I need to know if there is something that’s going to influence, especially negatively, what we plan to do together.”

To counteract the potential chaos that arrives with an emergency, a family Care Squad is recommended by Golden. The purpose is to determine who’s going to do what. All family members can have a care role regardless of geographic location. For example, out-of-state family members can help by making phone calls or by handling administrative tasks such as billing. By engaging with the family in these planning details, you have shifted the conversation from an insurance need to practical planning. The advisor has served as a facilitator within this process.

Following the establishment of the Care Planning Team, the advisor presents various insurance and non-insurance options based on age and circumstances. Different solutions are presented to the family in anticipation of future care needs. For example, term life insurance with a long term care endorsement. The Care Planning Team provides a forum to make it easier to talk about products.

The afternoon continued with “Solutions That Won’t Scare You” with Kathy Kuhns, divisional sales manager, and Tony Massenelli, director Long Term Care Sales, at Nationwide. Massenelli took back up the discussion of the emerging trend of state-run long term care insurance initiatives.

While the State of Washington is the furthest along in this process, he mentioned 13 other states that are at least looking at what Washington did. Efforts to avoid what occurred in the state of Washington are ongoing and Massenelli credited NAIFA’s important state advocacy work. He added that Nationwide is partnering with NAIFA and is leveraging their own state lobbyists, specifically right now in New York, Pennsylvania, and California.

Massenelli stressed the importance of planting the seed with clients around long term care, especially in states that are considering a public, tax funded plan. “You can talk to them about what the potential tax could be to them. And I say this because for those of us who lived through what happened in Washington—it came down to the last minute. You never want your client to come back to you and say, ‘Why didn’t we have this conversation?’”

Kuhns provided her insights on long term care and the conversations surrounding it. An easy to forget fact is that more than half of the initial long term care claims start in the home. This allows the advisor to launch a more positive conversation focusing on language that is reassuring to the client. “Let’s discuss how to pay for you to stay in your home as long as possible, just in case you need some kind of care.”

Kuhns drew attention to the fact that, in couples, it is the woman who is more likely to focus on the consequences of not having a long term care plan in place. If you encourage the wife to lead the discussion, talking about her concerns, putting a plan in place is more likely to happen.

Massenelli left the audience with an important reminder, “If you don’t talk to your clients about long term care, someone else will.”

Golden introduced the next speaker, Ramona Neal, president of Living Benefit Review. Neal presented “Don’t Be Spooked by Living Benefit Riders” on the growing market for chronic illness and critical illness riders.

To set the stage Neal defined a “living benefit” as the ability to use the cash value to supplement retirement income in a life insurance policy. With illness and critical illness, riders are also a living benefit. “What you’re doing is you’re accelerating the death benefit while you’re alive, you don’t have to die. So, to me a positive connotation.”

According to Neal the matter that can be at dispute, and at times even lead to litigation, is the fact that the entire death benefit, or a larger position of the death benefit, may not be eligible to be accelerated for care. Rider benefit solutions vary significantly, and it is important for advisors to understand this. She went on to state that, “The rider solutions are good. The problem isn’t any of the riders. The problem is: Are we adequately managing expectations on how they work? For example, chronic illness riders with no charge until acceleration are a good fit for certain sales applications. If your goal is to maximize cash value to supplement retirement income, then you don’t want the charge.”

To close out the day’s program, Cindy Harris, director of Sales with LifeSecure presented “Don’t Let LTC Planning Decisions Become a Daunting Nightmare.” LifeSecure, based in Brighton, MI, grew to be the number one carrier in the worksite space in 2016. According to Harris, their focus on worksite makes sense from a distribution perspective. “Consumers obviously still purchase individual products. But when an employer endorses something, the employee tends to feel more comfortable.”

Harris explained that scary in the context of long term care insurance can mean a variety of things including the price is too high or the policy is too complicated. To reduce the complication factor, LifeSecure offers traditional life insurance with a simplified long term care plan design.

“Sometimes you give a client too many choices, and their decision is not to buy because they’re confused.” LifeSecure offers four plan designs set at $50,000, $100,000, $200,000, or $300,000. “That seems very limited when, in fact, it’s easier for people to make a decision when they have fewer decision points.”

The average age of LifeSecure’s newly insured is 48 and they purchase more of the $100,000 Benefit Bank than any other product. This policy will provide a $2,000 monthly benefit. You may think that this is a rather small payout, but according to Harris, “It’s not always about how big of a plan design you have. A lot of it is about peace of mind and taking the burden off the family on what they’re going to do next, to take the burden off your loved one.”

NAIFA’s Third Annual LTC IMPACT DAY closed with Golden thanking all presenters for sharing important and timely information and for their support of NAIFA’s Limited and Extended Care Planning Center and LTC Legislative Working Group.

Carroll S. Golden, CLU, ChFC, LTCP, CASL, FLMI, CLTC, is the executive director of the NAIFA Limited and Extended Care Planning Center (LECP). Golden has an extensive background in business development, solutions selling, risk management and insurance distribution. She is recognized throughout the industry as one of the foremost thought leaders and subject matter experts on extended and long term care. Working with the LECP Founding Sponsors, Carroll and her team at NAIFA have put together the LECP Center to rethink extended and long term care.

Golden has held executive positions with both brokerage distribution and corporate carriers. She has been interviewed both on radio and television, has written numerous articles, and often presents at virtual meetings and various industry conferences. As a member of the Society of Financial Service Professionals (SFP), she served as chapter president and taught continuing education (CE) classes. She served as chairperson for both the Society of Actuaries Fifth LTC Conference and the Tenth Annual Intercompany Long Term Care Insurance (ILTCI) Conference. She currently participates on the board of directors of the ILTCI. Golden is listed on the International Retirement Resource Center’s Speakers Bureau and is currently working on publishing a book dealing with tomorrow’s multi-generational advisor/agent.

Golden can be reached via email at cgolden@naifa.org. Cell phone: 817-709-6859.

Brendan Bernat serves as director–Member Advancement for the National Association of Insurance and Financial Advisors (NAIFA), where he is a contributor to NAIFA’s Advisor Today magazine. He is the staff director of NAIFA’s Leadership in Life Institute. He oversees a program portfolio that includes the NAIFA Live webinar series and the Life Underwriter Training Council Fellow (LUTCF®) designation. Bernat graduated with a B.A. from George Mason University (1995).