Long-term care is the last hole left in many portfolios. Consumers tend to avoid the topic because it's uncomfortable to think about. However, long-term care is the single biggest risk standing in the way of a happy retirement and legacy. People who don't allocate something to long-term care risk allocating everything to long-term care. I'm sure you've observed this happen in your own practice as the situation is quite common. Married couples have a 91% chance that one of them will need LTC services before they pass away.
The cost of long-term care is sky-high and will likely continue to climb. In 2023, a private room in a nursing home can cost upwards of $10,000 a month!
The kicker is that consumers aren't getting the guidance they need to protect themselves. In a recent study conducted by a major insurance agency, 87% of clients said that they had to bring up the topic to their advisor, not the other way around! Most advisors don't know enough about long-term care insurance to provide proper guidance. Others think they know, and don't realize how much long-term care insurance has changed in the past few decades.
The Checkered Past of Traditional Long-Term Care Insurance
In the 'olden days', long-term care insurance was a clunky product. Carriers essentially had the power to increase premiums by however much they wanted at any time they wanted. These policies were also 'use it or lose it' type products. If a policyholder died without ever needing long-term care, NONE of the money they paid into the policy would be returned to their family.
Traditional long-term care insurance was a financial gamble for many consumers. It wasn't until recently that a new type of long-term care insurance product emerged—asset-based long-term care insurance.
How Asset-Based Long-Term Care Insurance is Different
Asset-based long-term care insurance policies are typically offered through life insurance carriers, combining life insurance and long-term care coverage. With asset-based long-term care insurance, policyholders can rest assured that their money will never go to waste—regardless of whether or not they ever need to use long-term care.
These products are nicknamed 'Live, Die, or Quit' policies. This means that a policyholder can either:
Live, and use the policy to cover long-term care expenses when they need it
Die, without ever having used the policy, and the value of the policy is returned to the family tax-free (sometimes even an amount MORE than what the policyholder put into it)
Quit, meaning abandon the policy and get their money back. This rarely happens because consumers realize how valuable these policies are should a long-term care event occur.
How to Have the Long-Term Care Conversation with Your Clients
The first thing you should do is start asking your clients one simple question: "Have you taken care of your long-term care planning yet?". Most people aged 55 and older will need some type of long-term care coverage during their lifetime.
When discussing long-term care insurance options with your clients, here are some things to think about:
Duration: How long does the client need coverage for? Do they have diseases that run in their family that could cause them to go into assisted living for years on end (e.g. Dementia)?
Inflation: Take into account what the cost of living is expected to be when the client may be projected to need care
Amount: How much coverage does the client need? Do they want to cover 20%, 50%, etc. of their expected long-term care bill? Do they have other assets they can use to supplement the costs should they need to?
How Attorneys Can Help
As an attorney, you are in the perfect position to help your clients protect their assets with asset-based long-term care insurance. You understand the complexities and nuances of estate planning. Most advisors don't have a deep knowledge of these topics, so they can miss out on key strategies that could save your clients thousands (if not hundreds of thousands) of dollars down the road.
At Wealth Solutions Network, we give you access to long-term care experts who can do the hard work and projections for you. All you need to do is have heart-felt conversations with your clients.
Want to learn more about how asset-based long-term care insurance can add 6 figures to your practice in under 1 year? Check out of course: Securing their Future.