1. Product benefits
Most prospects and clients don't want to know every detail of a policy's coverage they want accurate information on the benefits they need. Steve van Gilder, CLTC, a Genworth agent and president of Long Term Care Specialists Inc. in Birmingham, Ala., says those need-to-know benefits include:
- Provision for independent caregivers: This benefit allows insureds to hire friends, relatives, etc. as home-caregivers; it works best when the insured anticipates needing help with the activities of daily living versus medical care and wants to receive care at home. "Most people think of this as the 'anti-nursing home' benefit," says van Gilder.
- Shared care: Allows two insureds spouses or partners, for example to be named on the same policy and share a pool of LTC benefits. Whatever benefits remain after the death of the first insured become available to the surviving insured.
- Inflation protection based on the full coverage amount: Some policies base their inflation adjustments on the remaining unused benefit, but it's more beneficial for the insured if the inflation increase is based on the original pooled amount.
- Care coordination: Expert advice provided by the insurance company to help family members or other caregivers determine which services and care providers to work with.
- Lump sum withdrawals: Home assistance or home modification provisions give a client greater flexibility in covering large expenses related to the need for care. For example, assume the policy pays a benefit of $4,000 per month and the insured needs to install a chairlift to get up and down the stairs at home. With this provision, the contract provides a pool of funds say, three times the monthly maximum benefit or $12,000 that the insured can use for the construction.
2. The insurer's staying power
The last thing you want to experience in your advisory career is to open the morning paper and learn that one of the LTCI carriers whose product you have been selling is making unfavorable headlines. (Just think of Conseco's move last year to put about 150,000 of its older long term care policies in a trust that would overseen by Pennsylvania insurance regulators.)
Clients buy LTCI when they are reasonably healthy with the expectation that the insurer will pay the contracted benefits when needed, but that need might not arise for a very long time. That creates a risk, especially considering the financial markets' recent volatility and its affect on financial services firms. As the clients' advisor, that means you must know the insurer's financial condition, says Gwenn Branstad, CLTC, an advisor with The Stonebridge Group, an affiliate of Thrivent Financial for Lutherans in Edina, Minn. It also means being familiar with the insurer's longevity in the LTC business and its claims payment history, she says.
3. The cost of local care
It can impress prospects when you show them surveys citing average national and statewide costs for LTC facilities. For example, the cost of a private nursing home in the U.S. rose 3.3 percent to $219 per day or $79,935 a year, according to a 2009 MetLife survey. Unless the prospects have recently had a family member receive long term care, figures like that will be an eye-opener for them.
A more effective approach is to cite current costs at local facilities with which the prospect will be familiar. Instead of saying that the average daily cost for a nursing home in our state is $X, for instance, it makes a stronger impact to quote the actual cost at the nursing home a few miles from the prospect's home. While it might take some time to compile that information, it's worth the effort. That's the approach Wendell Morgan, an agent with Bankers Life & Casualty in Austin, Texas, takes because he services clients' claims after they've entered a local care facility. As a result, he has firsthand knowledge of the facilities' charges and can use that information in his presentations. "I can say, here's what it costs locally. Do we want a play that pays all the cost or part of the cost? Tell me what you're thinking."
