HEALTH INSURANCE
Selling LTCI to the Affluent
To be successful, time your discussion right and reposition LTCI.
Preeti Vasishtha
Talk to advisors who sell long-term
care insurance (LTCI) and many of
them will tell you that it can be challenging. If you sell LTCI to the aff luent—those
who have at least $5 million in liquid assets—you need to adopt a different approach. If you time your discussion right,
present LTCI in the right way, and keep
in mind what affluent clients want, you’ll
be successful.
When you work with the less affluent,
you look at ways to either bridge their assets to Medicaid or make sure they do not
spend their assets so that they will have
enough money in retirement, says Arthea
S. Reed, Ph.D., a seven-year MDRT member, one-time Court of the Table and one-time Top of the Table qualifier. “With
the affluent, you are looking at protecting 100 percent of their assets. I find that
my affluent clients are at a far greater risk
than the less affluent. They are going to
lose more. The less affluent may end up
on Medicaid, but the truly affluent can
lose $5 million in care costs down the
road. That’s already happening in some
families.”
BRING UP LTCI WITH YOUR AFFLUENT
CLIENTS WHEN YOU ARE LOOKING AT THE
DISTRIBUTION OF THEIR WEALTH.
When is it a good time?
When you help your client with retirement planning, you look at ways to
continue growing and distributing his
wealth. The best time to bring up the
subject of LTCI with your affluent client
is when you are looking at the distribution of the wealth, says Reed, who runs
her own company called Long Term Care
Connection Inc., in Asheville, N.C., and
is also a Northwestern Mutual financial representative. Ask your client these
questions:
• How do you want to fund for the
single greatest risk you will have in your
later years?
• How do you want to fund your care?
• Do you want to fund it through an
account set aside or through insurance?
Point out that if the client doesn’t make
a decision, he could look at his assets being reduced by huge amounts. Also, work
out the tax implications of the funding.
Affluent clients should consider purchasing LTCI no later than when they begin planning for their retirement or the
distribution of their estates, Reed says.
Insurance requires insurability. Clients must be healthy when they buy it
and insurance companies are increasing
their underwriting requirements. “Some
things that were insurable when I started
in the business 10 years ago no longer are.
In my opinion, it is a good idea to pur-
chase LTCI prior to the age 50 medical
protocol,” she says. Clients may want to
consider buying LTCI earlier if there is a
family history of chronic diseases. LTCI
can be purchased from most companies
for a client as young as 18.
Repositioning LTCI
Many clients avoid discussing long-term
care planning partly because the insurance industry has been selling LTCI from
the perspective of what could happen if the
client does not own the product. Even the
name, long-term care, presents a negative
image, Reed says. “What comes to your
mind when I mention the phrase ‘
long-term care?’ Is there any other topic you can
