In the last few years, the long-term care market has been like a white water rafting trip.
On a rafting trip, you may have some anxiety as you go through the rapids. It may be scary – you could get a face full or water when you’re least expecting it, or you could feel like you’re going to fall out of the boat. You may start to second-guess your decision, but you NEVER, NEVER, NEVER jump out of the boat. Just listen to your guide – they know how to get you through the rough patches to the smooth water. Stick with it, ride the ups and downs, and know the situation will change.
It’s the same with the LTC planning. We all know pricing has changed. Carriers made incorrect assumptions and mispriced blocks of business. Not only that, but also they gave the farm away with 5 percent compounding inflation and lifetime benefits. How could they have ever been profitable trying to manage an unknown risk?
But, what happened, happened. We can’t change the mistakes of that past, but we can change how we approach the future. We must adapt to the new market – that means we can’t keep selling policies the same way we used to.
Despite the market’s ups and downs, many of us are still trying to sell the Cadillac plan – the most coverage our client could possibly afford because nursing home costs are through the roof. What typically happens in this case? The client says, “Wow, that’s too expensive. I could never afford that!” They walk away.
Does that approach do anything to help our clients? No! When we do that, we waste their time (and ours), and they’re left completely unprotected.
Remember, some coverage is better than no coverage. Yes, a smaller policy probably won’t cover 100 percent of the costs of care, but I have yet to see a client send a check back because it wasn’t enough. Also, a lot of different planning options are out there, so be open to different scenarios and remember that the product is just the funding option for the overall plan.
The next time you’re having an LTC planning discussion, don’t jump out of the boat at the first sign of trouble. Be persistent, relax, and find a way to reach the calmer waters ahead.
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.
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