Buying And Selling LTC Insurance--Still A Balancing Act

4."The carrier won't be there or won't pay claims." For previous generations, trust in name-brand insurance carriers was enough to secure an insurance sale. Boomers, however, will not place trust blindly in the reputation and promises of the carriers. Indeed, companies are delving deeper into the claims process to explain how it works and what the promise of a LTC insurance contract means. One leading carrier has even announced the built-in availability of a third-party organization to review claim disputes, helping to ensure claims are processed efficiently and effectively.

An Advisor's View

Advisors also struggle with potential issues associated with LTC insurance. They are justifiably concerned there might be pitfalls with introducing a new product to a loyal and valuable client. Also, some perceive the product as having little benefit in advisor compensation and in client appreciation and could in fact pose potential harm to the client-advisor relationship if a poor experience occurs. Here are some concerns advisors expressed:

1."The product is too complicated." This objection might be dated, because in recent years carriers have worked to simplify LTC insurance. However, because the average producer may only sell 2 to 3 policies a year, it is still a legitimate concern. To help alleviate this concern, it makes sense to enlist a brokerage general agency to assist in sorting through the products and give timely product comparisons. Another approach is to partner with an LTC insurance specialist, allowing them to do the selling and underwriting and then split the compensation.

2."The enrollment process is too difficult, from licensing to the application." Many carriers assume that LTC insurance is an advisor's primary business and don't realize this is often only an occasional product sale for them. Again, using a BGA can help provide required producer training, make sure advisors have the correct applications and help to track the application throughout the process up to policy issuance.

3."My client can self-insure." There is no doubt that many clients can handle the cost of care, even if the claim is a 10-year-plus-Alzheimer's incident that will cost hundreds of thousands of dollars. The question then becomes, Does that financial burden make sense? Many clients who can afford to self-insure buy Medicare supplement plans without regard to the premium. The important issue in this case is to look at the options and write down a plan–whether that includes LTC insurance, the use of retirement funds or the use of other plans, including a combination of life and LTC insurance or an annuity-LTC insurance program.

The perceived downside to buying LTC insurance comes down to 3 basic elements: its cost, the uncertainty of the client using the benefit and the application process. All are legitimate concerns. However, when you weigh these elements against the alternative of not insuring, many clients and advisors will quickly come to the conclusion that in spite of the concerns, LTC insurance is ultimately a smart choice to help secure a positive financial future for consumers and their families.

Tom Riekse Jr., is a managing principal at LTC Insurance Partners LLC, Libertyville, Ill., a nationwide LTC brokerage agency. He can be reached at