How Early Planning for Long Term Care Creates Value for Clients
by Matt Valente, Regional Marketing Director, Lincoln MoneyGuard ® Solutions
Whether your clients are pre-retirement age or younger, one of the best ways to help ensure that they plan for long-term care before it is needed is to include it in their retirement planning. Ask your clients this important question. It seems that with each passing year clients are facing greater demands on their income, even as their affluence grows. “From my relationship with First Protective advisors, I know that developing an efficient plan to meet current client needs, while not losing sight of the future, is a responsibility you take seriously,” says Matt Valente, Regional Marketing Director, Lincoln Financial Distributors(LFD). “It’s the rare client where trade-offs are not part of the planning process, “adds Matt, “so each decision is weighed carefully and your advice is as valued as ever.”
Every day you work with clients you see first-hand how important it is to work within their existing resources. Clients have learned how to make their resource go further by becoming more value conscious in their buying habits. From digital subscription fees to where they vacation, from the return on college tuition to how they shop for everyday needs, they’re spending more and demanding more in return.
When I’ve had an opportunity to meet with First Protective advisors, I hear about the challenges of trying to meet competing client goals; all of them important. I’m often asked, “how do I interest younger clients in making a commitment to long-term care planning when so many other goals are a priority?” One option is to appeal to their value mindset. Clients who plan early can build policy values, maximize their benefits and lower annual costs using a hybrid long-term care funding solution.
Early planning, when younger clients are generally in good health, makes it easier for them to qualify for coverage. With Lincoln MoneyGuard® products, they can use extended flex-pay to spread out premium payments during their working years and be paid up by the time they are 65. For example, since expanding the flex-pay program, we’ve seen more clients in their 40s and 50s use extended payment options. This feature enables advisors to present a solution to clients with lower premiums. Clients can afford valuable protection without having to sacrifice other priorities they may be funding.
When you help clients plan early, there are additional financial benefits that can add value to their long-term care coverage, especially when benefits are more likely to be needed. A client who selects inflation protection completes premium payments by age 65 and has no need to access benefits until age 80, will see their policy accrue additional yearly and monthly long-term care benefit amounts provided. no LTC benefits have been paid or loans or withdrawals taken. Should they decide they no longer want or need the coverage or the death benefit, they can use the return of premium option to recoup a large portion of what they paid, according to the schedule they elect at policy issuance. Granted, for some clients, the financial benefits of early planning may not be compelling enough to engage them in the long-term care discussion. Instead, you might want to ask them about their caregiving experiences. Most people are familiar with caregiving, having either provided care themselves or knowing someone who has. The caregiving experience—both good and bad—can be a good conversation starter because discussing it leads people to reexamine their attitude toward their own care.
*Scott Safford, Internal Marketing Consultant at Lincoln, stresses the importance of including the entire family in the long-term care discussion and having it before care is needed.
“Our research informs us that 9 in 10 consumers believe this is a conversation that should take place with their advisors, yet most advisors observe that conversations (75%) are triggered when someone close to them needs long-term care”. * Clients who postpone their planning may see their options shrink as they get older, making it more difficult for them to receive the type of care they
want. Involving the family in the discussion allows them to have an opportunity to learn about the attitudes they share and where they differ when it comes to their own care. Getting on the same page with their loved ones entails a realistic assessment of everyone’s ability to provide the care that may be needed. For families with children that are too young to be included in the conversation, “having a plan can help avoid drawing the children into caregiving when they get older and have their own families” adds Scott.
According to LIMRA, the types of long-term care solutions purchased are changing. Traditional stand-alone long-term care insurance made up just 21% of the market in 2017. ** Close to 80% of the market is life insurance with critical illness riders (39%) and life/LTC combination products make up the other 40%. Younger clients, whose only exposure to long-term care insurance may be through a parent or grandparent who purchased it many years ago, may be unaware of how these products have changed.
Traditional LTC insurance offers long-term care benefits for policy owners needing LTC and may be less expensive than established hybrid products that offer guarantees. Hybrids, however, offer LTC benefits if they are needed or death benefits if they are not. MoneyGuard also offers a return of premium benefit for policy owners who decide they no longer need care, if the option is elected when their policy is issued. According to Matt, “the benefits of hybrid long-term care products resonate well with clients concerned about the overall value of their investment in LTCexpense planning”. LTC benefits also come with tax- advantages. When policy owners access their benefits to pay for long-term care, those reimbursements are income tax-free. *** Death benefits and a return of premium options are also income tax-free. ****
Whether your clients are pre-retirement age or younger, one of the best ways to help ensure that they plan for long-term care before it is needed is to include it in their retirement planning. When discussing retirement risks, Matt suggests asking clients “how they would feel if a long-term care event meant that they could lose control of their assets”. Without a plan for long-term care, clients may find themselves in the awkward position of choosing between the type of care they receive and the legacy they planned to leave. Adds Matt, “that’s not a choice advisors want for their clients.”
