Early in my financial services career, a respected mentor taught me something that has stayed with me throughout the years: “In the absence of value, price is the only thing.”
While those words of wisdom are applicable to any product, they seem especially true of long-term care insurance (LTCI). As I travel across the nation, helping financial services professionals present long-term care solutions to both individual and corporate clients, I’ve come to realize that many are struggling to communicate the true value of LTCI.
It’s About Positioning
As long-term care policy features and benefits continue to evolve and grow more complex, it’s easy to understand why some professionals tend to dwell on the mechanics of LTCI.
Unfortunately, when you emphasize daily benefits, COLAs and other policy details, you’re much more likely to confuse clients than to inspire them to take action. Indeed, according to a Genworth/Age Wave study, confusion is the most common reason — other than cost — why Americans don’t buy LTCI.
The most successful advisors avoid falling into the product trap. Instead of pitching an insurance product, they position LTCI as a solution that plays a vital role in a client’s broader retirement planning.
By doing so, you won’t just be putting yourself in the company of successful LTCI producers, but also in the company of comprehensive financial planners, investment advisors and retirement plan providers, who almost universally include long-term care on their retirement readiness checklists.
As Americans near retirement, their focus begins to shift from the challenge of accumulating assets to the even more difficult challenge of converting those assets into income that can last 40 or 50 years. Additionally, they’ve got to guard those assets against a variety of risks.
Long-term care insurance helps manage three significant retirement risks:
- Health expense risk. Long-term care expenses — which aren’t covered by Medicare — could consume hundreds of thousands of retirement dollars.
- Longevity risk. Ever-lengthening life expectancies, enabled by medical advances, increase the likelihood of needing long-term care services at some point in our lives.
- Lifestyle risk. Long-term care needs pose more than a financial risk. They also jeopardize clients’ ability to enjoy the quality of life they deserve — whether that’s with home health care or at a care facility.
Keeping It Positive
Nobody enjoys picturing themselves having physical difficulties and living in a nursing home — least of all baby boomers, who typically think of themselves as 10 years younger and 10 pounds lighter than they are.
Despite that fact, many financial services professionals continue to beat a drum of negativity, hoping to disturb their clients into action with an array of alarming statistics.
The beauty of a retirement-centered approach to long-term care is that it lets you take a much more positive and aspirational approach.
Rather than telling a couple that one of them is likely to be confined in a nursing home for two or more years, try using language like this: “It’s exciting. Thanks to better medical care, we’re living longer, fuller lives. We need to make sure we’re planning for that in a way that helps you keep your independence as long as possible and enjoy the type of living environment you deserve.”
Next week: How to describe an LTCI policy's economic value.