Here are Three Good Reasons…and How to Do It!
Your clients (and their children) are counting on you to help identify and manage all financial risks that impact their portfolios. That includes the risk of spending legacy assets to pay for long-term care.
When you recommend suitable insurance, you:
- Protect assets under management
- Protect your client relationships from competitors
- Build a bridge to the next generation
The risk of silence
And there's a fourth good reason…the risk of silence. According to a Wall Street Journal study, failure to consider long-term care needs is one of the top ten mistakes that investors make.*
Of course, you run your own business, and you alone choose the products and services that you offer to your clients. But please consider the advice given by Harley Gordon, well-known speaker, author, and elder law attorney. Mr. Gordon cautions, “Failure to talk about (the risks of long-term care) may subject financial planners to a claim of breach of due diligence.” Gordon emphatically states that “financing long-term care is a critical part of any retirement plan.”**
What should you do???
First, establish a partnership with independent long-term care experts. A good long-term care partner brings knowledge of care delivery systems, costs, insurance options (including hybrid life/long-term care policies), tax benefits, government-paid benefits, and how to find the right sources of funds to pay premiums. Partner with Delta
Long-term care is our primary business…not a sideline. We bring sixteen years' experience with long-term care and life insurance. Delta is independently owned, and we support multiple products.
Our interests are the same as yours: to provide client-centered impartial advice. We provide an invitation letter to set up client meetings. Then we provide a simple questionnaire that helps you to discuss long-term care planning as you meet with your clients. Send us the completed answers, and we will recommend suitable insurance coverage.
We will suggest the right products and prepare personalized sales illustrations for your review. In most cases, you will get them the day you request them.
We recognize that you are a busy financial professional, and that you may not be a long-term care expert. So Delta 's licensed professionals will back you up on speakerphone when you present your recommendations.
Talking to your clients…
With Delta in place, it's time to talk to your clients. Here are the steps you should take:
Communicate your concerns . Speak first to clients between the ages of 50 to 75. Ask a question: “What have you done about long term care planning?”
Tell them that you feel an obligation to help them identify and manage all of the financial risks impacting their portfolio, including the risk of long-term care expenses.
Provide information. Mention today's longer life expectancies, and most clients will nod their heads in agreement. Here are some key discussion points:
- Long-term care expenses represent a significant financial risk. The
average cost of nursing home care today is about $65,000 per year (costs
are much higher in many metro areas)*. Over half of the people
who enter a nursing home will be there for an average period of two
to three years. *.
- At $17 to $20 per hour for homemaker services, home care can quickly
deplete assets when it evolves into a need for round-the-clock care.
Then, home care can cost over $175,000 per year—three times the cost
of nursing home care.
- The cost of care is currently increasing at about 5% per year. A typical
two to three year period of care costing $130,000 to $195,000 in today's
dollars is likely to double to $260,000 to $390,000 in less than fifteen
years.
A well designed insurance policy can balance that potential liability with a suitable asset: LTC benefits. It can guarantee a tax-free pool of money to reimburse care expenses. With inflation protection, the policy can also guarantee that the reimbursement pool will grow at 5% per year for as long as the client lives. How many other opportunities provide a 5% after tax guarantee, without market risk?
Ask them if they have a plan. If clients say they own long-term care insurance, congratulate them for their foresight. It seldom makes sense to replace existing coverage, but it may be appropriate to supplement their coverage.
Most clients have no plan. They do not own LTC insurance. Invite them to a free risk review meeting. Assure them that they will not be pressured to buy anything at the meeting.
What to do at the meeting…
Listen! Don't sell. Ask questions to qualify your clients and determine their needs. Here are six important ones:
- Are you in good health?
Good health enables your clients to
own the insurance they may need…their money pays for it. Are they of
normal height and weight? Not using a walker or other mechanical devices?
Recent surgery? ( Ask what kind and when. ) Any lifestyle changes because
of health problems? Write down their answers, and call Delta. Click
here for more information on insurability.
- Where are you likely to be living when you are in your 80's?
Most claims occur among people in their
80's and older. Coverage should reflect costs where they might then
be, as well as costs in the local area. Contact
Delta, and we may be able to give you some regional costs.
- Where would you prefer to receive care? At home? Assisted
living?
Most will opt for home care. And who
would provide that care (bathing, dressing, moving from bed to chair,
etc)? You will establish the need for professional help. That means
home care coverage should be the same as for nursing home care.
- How important is it to leave legacy assets to your children?
If important, ask if they have existing
life insurance. Coverage can include life insurance, especially linked-benefit
insurance that combines life and long-term care coverage. These hybrid
policies can be funded with tax-free exchanges from old cash value life
insurance policies.
- Is there sufficient cash available to pay for all uninsured
expenses?
It's not likely. And it is even less
likely that the cash is growing fast enough to cover the ever-increasing
costs of long-term care.
- If there isn't enough cash, what assets would be liquidated
first as LTC bills arise? Now is the time to discuss this and
to review asset allocation, especially if the client is uninsurable
and is forced to rely on their portfolio to pay for long-term care.
Next Steps: Delta 's LTC Plan Questionnaire
These questions are all available in a simple one-page Fact Finder that you can fill out as you meet with your clients. We suggest that you file the completed forms to document your client discussions. Send the completed form to Delta , and we will use your clients' responses as a guide for our insurance and plan design recommendations. |