LTC education: It's never too early

The mandatory LTCI Shopper's Guides, which licenses sellers of LTCI are required to give to consumers by law, are a terrific resource for you and your clients. They provide unbiased information that can help best determine their needs. Because there are various factors to consider when deciding on LTCI coverage from personal risk (e.g. family and health history) to financial considerations, I encourage every advisor to work closely with their clients and bring in LTCI wholesalers and specialists to provide further insight during the education and application process.

Determine the right amount of coverage.

Premiums are an important consideration when electing LTCI coverage, but it's not the first determination. The first question to ask is how much money your client is willing and able to spend from their accumulated assets towards long-term care services in the future. Then, find out cost of care around the country (Genworth's Annual Cost of Care Survey interactive map is a great start). When compared to the average costs of LTC services that your clients are likely to face, LTCI policies often make financial sense.

Don't assume that the most expensive policies which offer the largest payouts are the best choice for every client.

I like a tuna fish sandwich every now and then, but I wouldn't want to be eating it every day just so that I could afford my premiums! The only way to know the policy that makes the most financial sense is to crunch the numbers. Go over asset allocation with your clients to determine a policy they can afford to keep and not afford to let go of.

Build the right policy.

When building a policy with a client, there are a number of factors to consider and decisions to make – many of which will require your expertise. From elimination periods to inflation protection, there is no one-size-fits-all formula. Many advisors inadvertently lead their clients astray by assuming certain things that don't always hold true for everyone. Offer inflation calculations so your clients can see the exact payouts that they will get and plan accordingly.

What to expect during the application process.

Applications for LTCI policies include detailed health questionnaires. What's more, most LTC insurers also require phone interviews with applicants over the age of 50. In my experience, this process is beneficial to both the client and their advisor. Everyone gains a better and more realistic understanding of potential future health concerns so that you can plan accordingly.

Once the application is submitted, an underwriter will decide whether or not to offer coverage to your client. Address any lingering questions to the underwriter's hotline or your LTCI product specialist who can offer additional insight. Most importantly, your client has 30 days to make any changes to the policy upon approval so ensure that you and your client have zeroed in on the exact coverage that suits their needs best.

Bottom line: Long-term care and how to pay for it requires thoughtful discussion with your clients.

For clients who aren't eligible for an LTC insurance policy, it falls to you to educate them on the expenses they may face in future. For clients who are eligible for a policy, act now. With your help, clients should know what they want and then find a policy that achieves it.

See also:

• 5 simple gifts
• You, the educator, part 1
• You, the educator, part 2