From the death of a breadwinner to the destruction of a home, insurance always provides a solution to a big worry. However, one type of insurance seems to stand out in triggering some worries of its own: long-term care insurance.
While the need for LTC planning has never been more widely recognized, many consumers continue to drag their feet when it comes to acting on LTC insurance recommendations. To overcome that reluctance, it’s critical to understand the worries that lie beneath the surface and to proactively address them—even before your clients do.
The mind of the LTC insurance buyer
Before delving into the reasons why people don’t purchase LTC insurance, let’s first review the top reasons cited by those who do. According to research by America’s Health Insurance Plans, the three most popular reasons people own LTC insurance are:
- To protect assets for themselves and/or their survivors
- To avoid dependence on others
- To protect their standard of living
Each of these reasons is a powerful motivator and should be infused in any LTC presentation. However, while it may sound illogical, I think it’s just as important to share with your clients some reasons why they might not want to own it.
Beating your clients to the objection punch
In my experience observing financial professionals across the country, I’ve found one interesting tactic often distinguishes the most successful from the others. Leading producers aren’t merely adept at addressing client objections, they actually bring them up before their clients do.
The psychological impact is powerful. By identifying potential reasons not to buy LTC insurance, you make it crystal clear that you’re not bent on selling something. As a result, you demolish the defensive wall that clients typically place between themselves and you.
Here are some of the top reasons why people don’t buy LTC insurance and how you can address them before your clients even bring them up:
Costs. Tell your client that the top reason why people don’t purchase LTC insurance is the feeling that it simply costs too much. Then explain how LTC insurance is actually so flexible that it gives you and your client the ability to work together, problem-solving backward to find the level of protection that matches the premium your client is comfortable committing to.
Confusion. Acknowledge that LTC is a topic most people don’t understand as readily as, say, car insurance—and remind them that your job is to help them navigate these new waters with confidence. Minimize their confusion by emphasizing the big-picture. Rather than diving deep into cost-of-living adjustments and other policy details, focus on the key overarching benefit: access to hundreds of thousands of tax-free dollars to cover LTC costs.
Denial. Let your clients know that many people are either convinced they won’t need LTC or are at least worried they’ll spend money to buy protection they’ll never use. Rather than using scare tactics, however, emphasize the positives: “We’re living longer lives and LTC insurance can help us enjoy our lives more by helping us stay independent as long as possible.”
Mistrust. Given the recent financial crisis, which witnessed the collapse of some of the world’s largest financial institutions, clients are wise to doubt the strength of an insurer promising to cover needs that may not emerge for another 20 or 30 years. Let them know you’re just as focused on that risk and that your due diligence as an advisor will help them select the right company and the right plan.
Advisor, heal thyself
It’s important to note that clients don’t have a monopoly on LTC anxiety—advisors often harbor their own fears and doubts, too. Despite the fact that consumers are increasingly aware of the need for LTC planning and receptive to discussing it with a professional, many advisors are nonetheless wary of the topic.
Many of them fear that, since they’re not quite as knowledgeable about LTC planning as they are about other financial solutions, they may jeopardize not only their own credibility but the best interest of their clients as well. Rather than investing the time and energy required to master the LTC market and its product landscape, advisors should consider partnering with a firm that specializes in helping financial institutions provide LTC solutions. By doing so, they can concentrate on identifying needs and tap an expert to furnish the ideal solution.
In my 16years in LTC insurance sales and distribution in both individual and corporate markets, no one has ever told me LTC planning is a terrible idea. Instead, what I’ve heard are objections about insurance as the best planning solution. Don’t let potential insurance objections prevent you from initiating a discussion that’s in the best interest of your clients.