Getting through to the boomers has been the greatest challenge of the fledgling long-term care insurance industry, and the key to the future financial success of both boomers and long-term care insurance depends on better matching them up before advisors everywhere have their nineteenth nervous breakdown.
One of the primary obstacles is that boomers still picture themselves as young, and their knee-jerk reaction is that long-term care events happen to people much older than themselves. So how best to get their attention on this issue?
1. Pitch LTCI as part of life-cycle planning.
Many financial advisors today practice life-cycle planning with their clients, creating a plan that addresses the five phases that span an individual’s entire financial life cycle:
- Early career (25 or younger to 35)
- Career development (35–50)
- Peak accumulation (50 to 58–62)
- Preretirement (three to six years prior to planned retirement)
- Retirement (62–66 or older)
In the peak accumulation phase, there is usually a point where a long-term care discussion is important. During this phase discretionary income may be at a high. This money could be used to fund the transfer of the long-term care risk to an insurer while still at an age to qualify and implement a solution with distinct economic advantages.
2. Address health care concerns.
How to pay for health care is the single biggest concern people have as they approach retirement. The cost of health care trends at 2.5 percent above the general inflation rate, according to the Kaiser Family Foundation. You simply can’t plan for retirement without factoring in the out-of-pocket cost of health care, which includes long-term care expenses.
Let’s say you have as clients a couple who has saved $400,000 for their retirement. You have determined that they need to be closer to $800,000 to cover their retirement living expenses to maintain their preretirement lifestyle. They are both 50 years old and just coming into their peak earning years, and they have time to make up the rest.
3. Draw on caregiving experience.
This won’t be easy. You would think that the hands-on caregiving many boomers have participated in would be enough to send them to their financial advisors to figure out a way to be better prepared for their own futures.
Not so, according to a 2011 study. Baby boomers overwhelmingly report that they learned the consequences of being unprepared during this experience; however, few have done anything about it. Further, boomers recognize the family’s financial and emotional burdens in the face of a long-term care event, and they value highly what long-term care insurance can do to alleviate these burdens. But they haven’t taken the actions necessary to secure this coverage.
4. Consider generational nuance.
When working with a boomer client, remember that there are two and perhaps three subsets of this generation. They are at different points in their lives and will entertain the long-term care discussion in different ways. After all, this group spans eighteen years, from 1946 to 1964.
See our infographic: What boomers want from agents.
5. Sell to women.
The most common worry for women after age 50? Not having enough money as they age.
Many have not saved much for retirement. Raising kids in a post-divorce, post-layoff world is a financial struggle for many. A number of women don’t think they will ever be able to retire.