Protection Products

Taking LTC Funding from Scary to Solved


Protection

Our world is full of complicated information. And the insurance industry is notorious for creating products that can be hard to understand. I’m sure we’ve all had clients suffer from “analysis paralysis” when trying to decide between multiple solutions. But it doesn’t have to be scary.

As advisors, we experience success when we can break down the complexities into a strong solution that the client can understand. And, believe it or not, it IS possible to simplify the way we help our clients fund a long-term care plan.

Once you’ve talked with your clients about long-term care and helped them understand the value of a written plan, it’s easy to stall out. But a written plan is only half the story. If they decide to use an insurance strategy to fund the plan, they will need our expertise to figure out the best way to proceed.

To keep it simple, there are four main categories to consider when finding the funding. Learning about your client’s complete financial picture will be your guide when deciding which funding option to recommend. And, once you’ve got that figured out, your Ash team is perfectly positioned to help create an individual solution for each client. The key is to choose a funding method that won’t force the client to sacrifice lifestyle or other financial goals.

Let’s look at each option, and which type of client it is most likely to fit best.

  1. Cash Flow: Cash flow is actually more than just cash. This is a good option for clients at or nearing retirement. They might have RMDs that they don’t need, a strong pension, income from a rental property, Social Security or other retirement income. If the client has enough cash flow to fund ongoing premiums without hurting their lifestyle, this can be a straightforward, easy-to-explain option.

  2. Idle Assets: This is ideal for clients with CDs, money market accounts, or cash value life insurance that doesn’t meet their needs anymore. Idle assets, by definition, are assets that aren’t working for the client. Think of them as gasoline still sitting in the pump. Until you put it in the tank, it’s not doing any good. Your clients can use idle assets to fuel their LTC plan.

  3. Qualified Accounts: Qualified accounts are things like IRAs or 401(k) and 403(b) accounts. They are plans that the client paid into with tax-deferred dollars. Clients might be afraid to use these funds because they’re scared of the taxes that will be due when they do. Luckily, there are options to minimize the tax hit when these accounts are used to fund a long-term care product. So it solves two issues—what to do with the qualified money and how to pay for long-term care. Win-win.

  4. Non-qualified Accounts: Because non-qualified accounts are funded with post-tax dollars, there is more flexibility and less concern over taxes with these assets. These are things like non-qualified annuities and the cash value from life insurance. They can be exchanged for LTC products without triggering a taxable event.

 

As advisors, we’re juggling lots of moving parts to create a solid financial plan. The upside is that by understanding the complete picture we’re in the perfect position to take assets from vehicles that don’t meet the client’s needs and use them to fund a long-term care plan. Because without a solid plan for long-term care, the entire retirement plan is at risk. And that’s something to be afraid of.

LTC long-term care insurance analysis paralysis

How ‘Major League’ Can Help You Pitch Long-Term Care


Protection

If you’ve ever seen the movie “Major League,” you probably remember it was about a baseball team made up of the biggest misfits anyone could put together. It was a team built to fail. (Spoiler alert: No, literally – the owner actually wanted the team to lose so they could move to another city.)

“Wild Thing” Ricky Vaughn had a great fastball, but, unfortunately, it was rarely a strike. Pedro Cerrano could hit a fastball into the next zip code … but couldn’t touch a curve ball. Willie Mays Hayes could run like the wind – too bad he couldn’t actually hit the ball so he could run the bases. Plus, manager Charlie Donovan used to manage a tire store … how could he manage to help this misfit team win?  

Long-Term Care Planning

The better question you may be asking is, “What does this have to do with long-term care planning?” Well, let me explain.   

First of all, the players on this team were out for one thing: themselves. Their focus was on what was best for them individually, not what was best for the team. They were blind to their real problems. This was especially true for Vaughn – he was literally blind to the strike zone and needed glasses to focus! When the rest of the team realized they were set up to fail, their focus changed, too. They had to come together, drop their old habits, and start focusing on what mattered. 

The same is true when it comes to long-term care planning. Both advisors and clients seem to be blind to what matters. I can understand why clients may be blind – we aren’t giving them the right tools (glasses) to focus on what they should really be looking at. As financial professionals, we have to make sure we’re throwing something they can actually hit, not lobbing in lazy pitches. 

  • Too often, we spend more time trying to sell clients insurance instead of discussing the impact a long-term care event could have on their family. Ball 1.

  • Despite knowing the above, we may have heard about a new product, and we wind up and throw a “pitch” as hard as we can. Ball 2. 

  • Sure, maybe we can throw a 100 mph fast ball, but if we can’t hit the strike zone, what does it matter? The same is true with showing clients a policy/strategy that gives them all the bells and whistles, but has an outrageous premium attached. Ball 3. 

  • Here comes the big one … some advisors say, “My client can self-insure.” But, even the wealthiest clients can appreciate the leverage and risk protection of long-term care insurance – we just have to show them the impact. Ball 4.

If we continue along this path, we’ll start walking in runs, losing games (sales), and the team (clients) may move to another city (advisor). So, how do we pitch so our clients can hit homeruns?

The Perfect Pitch

  • First, we start with the right conversation – the conversation about the real possibility of a long-term care event, and the impact it could have on their family.

  • Next, we make sure they see the positive, lasting impact this decision will have on their family and their finances. No matter their situation, long-term care planning is something everyone needs to ensure they get the care they want and deserve. 

  • Third, we help them find the right funding option, ensuring they get proper leverage for their investment. 

  • Finally, we show them a solution that actually fits their needs, not the solution of the month.

The next time you’re ready to pitch long-term care to your clients, grab your Wild Thing glasses and get focused – you’ll win more games and take your clients to the World Series. If you continue to lob your throws across the plate? You’re only setting yourself up to fail. 

 

About the Author

Chad Eyrich is proud to help keep families together with long-term care planning. He helps advisors and their clients avoid the potential financial devastation of an LTC event by providing strategies around traditional, asset-based and linked-benefit insurance. In addition to earning his Long-Term Care Professional and Certified in Long-Term Care designations, Chad has a life and health insurance license, and a property and casualty insurance license. 

long-term care LTC baseball