How advisors can help solve the health care cost crisis

To start, financial planners should explain how Medicare works, as well as discuss "medigap" options — policies offered by private carriers to pay for whatever Medicare does not cover, such as co-payments, deductibles and coinsurance — and budget for such coverage accordingly.

A second step might be to recommend the purchase of, and budget for, stand-alone long-term care insurance — or perhaps a hybrid product that combines life insurance with a long-term care option. If the cost of long-term care insurance is an issue, short-term care coverage might offer a partial solution.

However it is packaged, long-term care coverage should be presented as part of a broader retirement plan to provide asset-protection, with policies designed to prevent a lifetime of savings from being prematurely depleted by treatment or aftercare for a severe medical condition.

The purchase of critical or catastrophic illness coverage might accomplish the same goal — to provide a backstop in case unanticipated medical expenses threaten to drain the retirement savings of an individual and their family.

In terms of product development, perhaps the addition of a new type of "stop-loss" insurance, capping a policyholder's medical costs, might also be offered. At present, "stop-loss" coverage is often purchased by companies that self-insure their health benefit plans, with a private "excess" insurer picking up aggregate costs if they exceed a certain level. Such coverage might benefit individual consumers as well by providing some certainty about their maximum probable loss on medical- or long-term care expenses in a given year.

Any of these policies might in effect provide "sleep insurance," so buyers can rest assured that medical costs won't devour their retirement nest eggs, allowing them to set aside savings with added confidence it will actually go toward their retirement income needs.

To put consumers on the road to a financially secure retirement, planners and insurance agents should make clients aware of potential hazards that could crop up along the way — such as unforeseen medical expenses — which might puncture their tires and leave them flat broke if they don't have a spare in the trunk in the form of asset protection policies.

By taking such concerns into account as part of a broader holistic approach — addressing multiple, often conflicting financial priorities in one sitting — consumers might not only have a firmer foundation on which to retire, but are likely to be more open to working with a financial services professional to put such a plan in place. 

"Meeting the Retirement Challenge: New Approaches and Solutions for the Financial Services Industry"—a full report on what else the Deloitte survey results suggest in terms of how to overcome the various barriers keeping life insurers, annuities companies and their intermediaries from more effectively connecting with retirement planning prospects — can be accessed here.