Customizing Long-term Care

Focus on clients, not statistics.

by Jim Gothers, Covr Financial Technologies

When it comes to long-term care solutions, statistics are scary, and too many options can confuse financial planning clients. Analysis paralysis usually results in a lack of any action at all.

No conversation about retirement and financial planning is complete without a discussion of the risk of a health-care or long-term care event. They do happen, and folks need to be prepared. However, throwing out the ugly stats about costs and likelihood of an event, followed by an outline of too many possible options, is not the best strategy when it comes to taking care of clients’ needs.

Instead, Covr recommends matching a client with a strategy before having the conversation, and outlining how a certain strategy aligns with that clients’ goals and unique situation.

Now, some stats are indeed scary: for example, people facing dementia are looking at more than $350,000 in lifetime costs associated with this type of care. The median nursing home cost last year was more than $100,000. About a third of people over age 65 will need some type of nursing home care. But it’s Covr’s belief that starting with the clients’ needs is a better approach than simply trying to beat the statistics.

Financial advisors should think about their clients: Are they hesitant to buy coverage due to cost, or worried that they’ll lose that money if they don’t need coverage? Do they want to self-insure for a long-term care event? Are they more concerned with a death benefit or leaving a legacy?

When it comes to meeting these needs, Covr recommends three approaches: stand-alone (or traditional) long-term care insurance, asset-based long-term care (also referred to as hybrid or linked-benefit), or permanent life insurance with a rider for long-term care or chronic illness.

Here’s a quick client snapshot:

Stand-alone: This client doesn’t need a death benefit and wants lower out-of-pocket costs.

Asset-based: This client wants to self-insure, and doesn’t want to risk losing money spent on coverage that isn’t needed.

Life insurance with rider: This client has wealth transfer goals and wants a death benefit, but is also worried about the risk of a long-term care need.

Now is a great time to talk to any clients who are sitting on some cash about how these options can fit in with and enhance their overall financial goals. Our online tools such as the asset-based long-term care estimator will show advisors real-time, side-by-side estimates of quotes from leading carriers.

Many advisors feel pressured to be product experts, but in reality, there’s no need to become a product expert in order to help a client. Covr offers a wide array of products, options, and online tools to help advisors meet their client’s needs. Our insurance experts are always ready to answer questions and help match clients to solutions. Advisors don’t need to be product experts; they simply need to focus on their clients.

By evaluating clients’ needs for long-term care, their need for life insurance, and their budget for meeting those needs, advisors can eliminate analysis paralysis, and strengthen client relationships.