Recently I’ve seen several articles saying that nearly half of applications for clients over age 70 are declined for LTC insurance. When we see things like this, it is instinctual to blame the carriers and give up on offering protection because “nobody is able to get it anyway” (and it isn’t the easiest sale in the industry). But these articles tell me 2 things:
1 – We need to pre-qualify our clients differently to get them to the correct solution issued the first time. And yes, there are options, even if a client cannot qualify medically.
And 2 – We really need to be talking to clients sooner, while their health is better, and premiums are lower.
Let’s look at each issue. First the pre-qualifying. When asking a client about their health, many respond with, “I’m in great health.” And they probably are. But with Long Term Care underwriting, the underwriter is not concerned about the history of heart attack, or even much about family history. They aren’t worried the client is going to die young. What really concerns LTC underwriters are the things that won’t kill us, but will make it difficult to get around. That lifetime runner who is starting to have knee pain so they are getting injections 4 times a year is a bigger concern to them than the person who had a heart attack 6 months ago and has recovered.
So, how do we get our clients to give us this information without giving them the third degree or filling out pages and pages of medical information? Ask open ended questions, like what did you & your doctor talk about at your last appointment? Are you seeing any specialists? What medications and supplements are you taking? With just a little bit of information, I can piece together enough to send the details out to the underwriters, and have a good idea of what each carrier will do. That way, we can give your client a realistic illustration and try to avoid the declines. Note: This is important because some carriers will not look at a client who was previously declined, even if medically they would take them. If your client is under 70, this is important to do. If you haven’t already, watch my video on how to start the Long Term Care conversation. It goes into profiling health at the end.
Second – talk to clients when they are younger. I’ll admit, it’s hard to talk to a 50-year-old about Long Term Care Planning, unless they have had a personal experience with Long Term Care, like with a parent or grandparent. Then, they understand the difficulty of providing or paying for care. I will also say, that unless your client has had that personal experience with caregiving, they are difficult candidates for LTC planning. The best way to introduce planning to a younger client is by making it a part of their complete retirement plan. Long Term Care planning is the wrap-around that keeps the other parts of our client’s plan for retirement safe. Their income, assets, charitable plans, are all at risk if they suddenly have an additional bill of $5,000 or more a month because they are in need of care. The best way to protect their retirement is to set up a source of dedicated income to cover long term care expenses. (If you want to hear more about this, please read my blog from June 2021, Income Planning with a purpose).
This isn’t to say that we should not talk to our 70-year-old clients about Long Term Care planning, because nearly more than half are being approved. The points are a) we need to be sure to profile ALL of our clients to make sure that we provide them with a smart solution and b) we need to position the conversation with our pre-retiree clients differently.