If you're recommending long-term-care insurance to clients as a way for them to protect assets and to care for themselves when they're old and sick, you're probably doing it incorrectly.
If you're recommending long-term-care insurance to clients as a way for them to protect assets and to care for themselves when they're old and sick, you're probably doing it incorrectly.
At least that's what Harley Gordon thinks. The president and founder of the Corporation for Long-Term Care Certification Inc. was a featured speaker at InvestmentNews' annual Retirement Income Summit in Chicago.
Getting clients in their 50s and 60s to think seriously about long-term-care insurance is really a matter of context and making them understand the risk to which they expose their families if they don't prepare, Mr. Gordon said.
Clients must know “the serious consequences of not creating a plan for extended care will have on their family,” he said. “The consequences aren't on ‘him,' but those whom he cares dearly about.”
The problem with most advisers' approach to long-term-care insurance is that they see it as a product-based strategy, and this throws them off their game because they aren't salespeople. The problem with showing clients bare facts, such as the fact that the risk of needing extended care will increase with age, is adversarial in nature and opens the door to opposition from the client, Mr. Gordon said.
“Your client will believe that the worst things in life won't happen to them but to someone else,” he said. Clients are also likely to believe that their risk is non-existent, or they may say they think they won't live long enough to need the care in the first place.
Instead, advisers ought to consider consultative engagement, which is based on educating the client about how severe the consequences would be if an unexpected event came up.
“Once he understands how severe those consequences are to the emotional, physical and financial well-being of his family,” Mr. Gordon said, “he will let you put together a plan to protect them from an event that he still believes will never happen.”
For clients who insist that they can self-insure, Mr. Gordon suggested the adviser ask whether those assets could be converted to cash easily to foot the bills and, if so, could they incur a loss due to market conditions.
“[LTCI] provides a stream of income that funds a plan,” he said. “If no income has to be used to pay for care, then the retirement income continues to be used to keep financial commitments.”
Above all, when advisers talk about long-term-care coverage, they may even want to consider their word choice and rephrase it as “extended care” or “care over an extended period of years,” Mr. Gordon recommended.
“With the phrase ‘long-term care,' people immediately think of old people, products and nursing homes. You are already starting in an argument.”
