Long-term care insurance has been around long enough with sufficient public awareness to ensure that the "sign me up" cases are a thing of the past. That means you're likely to encounter objections to buying the coverage–some valid, others unfounded. Overcoming these objections will mean the difference between getting the coverage in place or not. Here's how experienced LTCI advisors respond to some of the most common objections you're likely to encounter.
I want to receive care at home. Despite the widespread publicity LTCI has received, some clients still have major misconceptions about the coverage based on outdated information. When Cheryl Sherrard with Rinehart Wealth Management in Charlotte, N.C., encounters this problem, she explains that today's LTCI policies are not the "nursing home" policies of the past. "(Because) they want to age in place and bring care in, they (believe they) won't use the benefits that LTC would provide," she says. "This is just a misunderstanding. The policies have changed drastically in what benefits they provide and most do provide at least equal benefit for care brought into the home."
Risk of premium increases. Premium hikes on in-force policies make headlines and can dissuade potential LTCI buyers. Michael Smith, LUTCF with CPS Horizon in Hales Corners, Wis., believes advisors should tackle that issue head-on. "If I were the advisor, I would advise the client that even though there are no plans to raise premiums, just to expect some kind of rate increase somewhere down the line," he says. "Almost every single major insurance company that has long-term care policies has raised rates on existing blocks of business. I think it's just important to prepare the client during the sales process that there is a likelihood that rates can be raised in the future and if there's going to be a rate increase, it could be between 10 percent and 40 percent, somewhere in that area." But it's also worth reminding clients that state regulators can scale back insurers' proposed rate increases. Smith cites an example from his state in which Allianz asked for a 25 percent rate increase last year. However, the state of Wisconsin allowed only a 10 percent increase.
