Long-Term Care Insurance Planning | Challenges with Insurance Planning

The greatest unknown facing financial advisors and retirees alike is just how long retirement will last. A close second is how much care your clients will need in their final years. While most people expect to have some care as clients age, the world of long-term care insurance planning is quite a bit different. We’ve assembled five issues that are on the minds of advisors when it comes to LTCI.


1. Long-Term Care (LTC) is becoming unaffordable.

Over the past decade, every type of health insurance has risen, but none so much as LTC policies. Certain states have different rules dictating premium increases, but in some places, increases have been over 100% in a single year. Astronomical increases like these make planning for long term care difficult as predicting them is akin to fortune telling. Tom Riekse, from LTCI Partners, LLC, agrees that this is a big challenge:

“[LTCI is] more expensive now, so most providers and clients approach it as part of a life insurance rider. We are trying to position it as education rather than a hard sell for affluent clients due to the costs.”

2. New Policies On The Market

As with any product, the market is full of choices. The question is, which policy is right for your clients? This can be a difficult decision, especially if made uninformed. There are several factors that go into deciding what type of policy to buy and all need to be considered carefully. Consult your clients before wading into the world of LTC policies to make sure you have a clear vision of what policies they would want.


3. Do Your Clients Have Enough Money?

If your clients don’t opt to have an LTC policy, they may consider paying out of pocket. This is most likely an unaffordable option for all but the wealthiest of your clients. There is the option of paying for a traditional and more affordable LTC policy, though these policies seem to be diminishing in popularity and don’t cover much outside of just the care. New “hybrid” whole-life policies seem to be taking their place but are anywhere from two or three times more expensive. Work with your clients to figure out what they can afford both now and into the future.

4. The Clients Themselves

Often, clients will be in denial about LTC. Some will say they won’t use it or will be reliant on Medicaid in the event that they do need extra funds to get them through. Needless to say, planning by denial isn’t really planning. Though it may be a hard topic to broach with your clients, push for them to consider LTC as a real possibility and work with them to purchase insurance or set money aside in the event that they need extended care.

5. Risk Assessment

Health, lifestyle, and genetics are all major factors in assessing clients risk later in life. This can be one of the trickiest aspects of planning for the need for LTC. Having an honest conversation around their level of risk and how to prepare for it, as it pertains to LTC, is important in securing financial security in their later days. HALO by Genivity can help with this process and provide customized, reliable data points for you to get the conversation started.