Long-Term Care (LTC) insurance seems fairly straightforward at first glance, but many clients and producers alike may not understand how it really works, or how important LTC really is to a secure retirement. Read on for the Top 5 Essential Things Your Clients NEED To Know About LTC!
1.) A traditional LTC policy isn’t cheap… (but it’s worth it, trust me!)
LTC has the very real possibility of being one of the most expensive aspects of retirement. As of 2015, the national median daily rate for a semi-private room in a nursing home was $220, with assisted living facilities averaging $3,600/month, and even adult day care running approximately $70/day. With these costs steadily rising (even outpacing inflation), what are your client’s plans to address this? While a traditional standalone LTC plan is one of the more expensive options to address these costs, the key takeaway is that you get what you pay for. If your clients can afford it, this is most likely the best fit. No other LTC alternative can provide the wealth of options and coverage that a traditional LTC policy can.
2.) … but there are more options available than ever before.
However, let’s be realistic – not all of us can afford a traditional standalone LTC plan. But the great news is that there are other options available. Whether it be a linked life/LTC hybrid product, a linked annuity/LTC hybrid product, a dedicated chronic illness/LTC rider attached to an annuity or life policy, or even a combination thereof, the bottom line is that there is coverage available for virtually any client with any amount to spend. The key is identifying the need.
3.) One of these policies is not like the other…
LTC policies, hybrid products, and LTC/chronic illness riders all come with a variety of options, and this is both a strength and a weakness. On the plus side, this allows much more customization for your clients – assuming they can medically qualify for the contract, there is a remarkable amount of leeway when it comes to tailoring a policy to fit their specific needs. However, it can also be a shortfall – advisors such as ourselves need to take special care to design a policy that covers EXACTLY what a client needs it to. The best way to prevent any misunderstandings in this case is to sit down with the client and thoroughly discuss exactly what they are looking for when it comes to LTC coverage.
4.) When you buy can make a world of difference.
Like most things in life, when purchasing LTC coverage, timing can be everything. While financial professionals usually encourage their clients to begin planning as early as possible, when it comes to LTC coverage that can sometimes be a detriment. For the vast majority of clients, the ideal time to consider purchasing LTC is approximately age 50 – according to the American Association of Long Term Care Insurance (AALTCI), 51.5% of applicants between 50 and 59 qualify for long-term care insurance, but only 42.2% between 60 and 69 do —and that number sharply drops off to 24% at age 70. The “sweet spot” when it comes to LTC is purchasing a policy while you are still healthy enough to be underwritten, but not to be locked in to LTC premiums before you actually need the coverage.
5.) No matter what, have the discussion, and do SOMETHING!
Many of us labor under the delusion that we’ll never need LTC coverage. However, the stats don’t lie – the AALTCI and Genworth estimate that over two-thirds of us will need LTC at some point in our lives, and unfortunately Medicaid and Medicare don’t cover the majority of LTC-related expenses. So what are you and your clients supposed to do? Which asset do you plan on selling first – your house? Maybe raid your 401(k)? Or how about the ever-popular “lean on your family” alternative? None of those options seem attractive, do they? So you and your clients need to do SOMETHING. Anything, really. And the first step is realization of the problem. Don’t wait – give your Zenith Marketing Sales Team a call today to get started.
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