Managing LTCI objections

"When the man is sitting back in his chair with his arms folded and not really getting the message and we talk about a shared plan, that gets him to re-think," she says. "I explain that if he is right and he doesn't need assistance, it is available just for his spouse. If he's wrong and needs assistance, it's available for both of them." That response has worked effectively for Pensack: She estimates that 75 percent of the couples that buy LTCI from her purchase a shared plan.

I'll self-insure
During the bull market, affluent seniors frequently assumed their growing portfolios could easily handle future LTC expenditures. Although that's no longer true for many investors, the self-insurance objection still comes up frequently, but it's often based on a misunderstanding of how self-insurance works, says Bob Gertie, CLTC, with Advisor Insurance Resources in Parker, Colo. "Clients have to understand that to properly self-insure, they need to set aside a lump sum of funds to pay for care if needed," he says. "These funds must be held in conservative, liquid-type investments. By setting aside these funds, they incur opportunity costs from being forced into safer and lower-paying investments."

Gertie shows clients how they can use their assets more productively in conjunction with LTCI instead of accepting the low rates available on liquid assets. "For example, rather than place $250,000 in a conservative investment to pay for long term care services, perhaps they can invest in a moderate income instrument and receive a 4 1/2 percent after-tax rate of return," he says. "That would generate $11,250 per year of after-tax income. They can now use that to buy a long term care insurance policy, let's say for $4,500 per year. That still leaves $6,750 as retained income. Further, they'd have the $250,000 that's a retained asset and not subject to depletion from long term care service costs."

By shifting the client's focus from premium affordability to estate preservation, Kevin Meehan, CFP, ChFC, CLU, CASL, with Summit Wealth Advisors, LLC, in Itasca, Ill., has found that prospective buyers often consider the LTCI purchase in a new light. He asks if the client wants to absorb the potential cost of LTCI with their assets or would they rather transfer that risk to preserve the assets for their heirs or favored charities. "We're talking about long term care as an estate planning tool–a total shift in the thinking," he says. "And interestingly, when you have a higher net worth client who probably could absorb the cost, I would say the conversion of those people looking to buy long term care is greater," he says. "Very often they understand more about risk management because they have been engaged in managing risk throughout their life, which is the way they have been successful in accumulating assets."

My family will take care of me
Another common objection is to claim that family members will provide free personal care if the prospect needs it. The family members are rarely consulted about this option, of course, but when they learn of the idea they see the value of LTCI. Pensack says that men often raise the family-care objection. She responds directly: "When I hear that, I say, 'Mr. Client, with no disrespect intended, but can your wife lift you out of bed today, let alone when she's 80 years old?' And then I ask, 'Have you had the conversation with your kids about which one of them is going to give up their jobs, their families, and their lives to be your full-time caregiver someday?' That's the point where the wife usually insists that they apply for coverage."