Managing Long-Term Care Risk for High Net Worth Clients

Managing LTC Risk for HNWC

Why would you recommend that clients with millions of dollars in invested assets spend money on a long-term care plan? Because it helps remove the risk from their portfolio.

With affluent clients, it’s not whether they can afford to pay for potential long-term care needs. But is it an expense they want to incur at an unpredictable time in their lives?

Long-term care concerns are similar no matter your clients’ net worth.

  • They may equate long-term care with a stay in nursing homes. In fact, 76 percent of long-term care insurance claims begin with home care or in assisted living facilities.¹
  • Another factor to consider is that long-term care is just that – long-term. About one-third (34 percent) of LTC insurance claims last at least two years and 13 percent last more than five.²
  • Active baby boomers may expect to remain healthy throughout retirement, but Americans turning 65 face a nearly 70-percent chance of needing long-term care services in their lifetime.²
Sources:  ¹ American Association for Long-Term Care Insurance; ² U.S. Health and Human Services Department

Self-Insuring Is Self-Funding

High net worth clients don’t have the affordability objection. But their mindset may be “If the time comes, we’ll pay for it ourselves.” That perspective could have an adverse effect on their portfolios if and when they do need long-term care.

Ask your clients if they believe another downturn in the market could happen. There’s also the likelihood that they could experience an unexpected health event. There’s simply no guarantee that their need for care would come at a time that’s either convenient to them or to the performance of their portfolio.

It may make sense to concentrate on insuring affluent clients’ investments with product solutions that can minimize their risk of absorbing the entire cost of care.


Collaborate with an LTC Expert to Boost Business

Collaborate with an LTC Expert

The recipe for a typical long-term care conversation calls for:

  • Equal parts rising health care costs and longer life expectancies
  • 1 preconceived notion about nursing homes
  • 1 heaping cup of confidence that a health crisis won’t happen
  • Pinch of fear that it will
  • Blend with emotional stories of caring for a parent or loved one

For best results, add the expertise of Nancy Simm, Director of LTC & Longevity Planning at Highland Capital Brokerage. She can be your secret ingredient to offset client hesitation when discussing this complex topic.

30 Years Working for You

Nancy suggests adding long-term care planning to your agenda with clients at their annual review or financial analysis. She knows they will be relieved that you have addressed the topic. When clients are open to it, arrange a conference call and introduce Nancy as a member of your team.

Then, you don’t need to be an expert on long-term care. She can be one for you. Take advantage of her 30 years of industry experience when helping clients make plans to protect themselves financially from potential long-term care needs.


8 Ways to Talk About Long-Term Care

Advisor with Clients

One reason your clients trust you with their assets is your recommendations help them sleep at night.

Whether the market is up or down, your advice provides peace of mind that clients count on. It’s time to put that calming effect to work on the topic of long-term care.

You owe it to your clients to talk about incorporating Longevity Planning in their financial plans. Breakthroughs in medicine, technology and public health have led to longer life expectancies. Your clients can look forward to many years ahead.

But there’s no guarantee they won’t need some sort of assistance. Americans turning 65 face a nearly 70-percent chance of needing long-term care services during their remaining years, according to the U.S. Health and Human Services Department.

Rest easy, we’ve got tips for making the subject relevant to a wide range of clients.


Women Are Ready for Long-Term Care Discussions

Two women

In your client meetings, which spouse has more influence on decisions? Perhaps you have noticed women are taking an increasingly larger role when couples implement your recommendations.

A survey by LIMRA revealed that women are much more likely to take action than men when it comes to retirement planning. And they are more concerned than men about their financial security risks in retirement (LIMRA Secure Retirement Institute Risk Perceptions study, 2018).

Keep this in mind when discussing long-term care with your clients.


Overcoming the Complexity of Placing U.S. Life Insurance on Japanese Nationals/Citizens

Japanese Family

A Plan to Avoid Japanese Gift Taxes while Minimizing U.S. Estate Tax Exposure

Meet the Tanaka Family

  • Michael and Michelle Tanaka, Ages 38 and 36 (respectively), Married *
  • Harry Tanaka, Age 6, Son of Michael and Michelle Tanaka *

* Dual Citizens of Japan and U.S.

The Need for U.S. Life Insurance

Michael Tanaka has been a serial tech entrepreneur since graduating in 2004 with master’s degrees in mathematics and computer science. In 2012, Michael created Tanaka, Inc., a technology startup focused on creating sophisticated algorithms that had the potential to revolutionize the quality control systems for major industrial manufacturing companies. A significant technological breakthrough in mid-2017 captured the attention of some of the world’s most powerful multi-national corporations. After receiving several enticing offers, Tanaka, Inc. was sold to ABC World, Inc. for a purchase price of $100MM, to be paid over a 5-year period.

Michael quickly realized that the sale of Tanaka, Inc. would require him to engage a team of financial, accounting and legal experts to assist him in managing and protecting the product of his hard work. One member of that team, a sophisticated estate planning attorney, advised Michael that the need for U.S. life insurance was an essential element to his estate plan, but that Japanese gift tax laws made the placement of U.S. life insurance in a traditional irrevocable life insurance trust (“ILIT”) problematic. Specifically, even though the Tanaka family currently resides in the U.S., the Japanese gift tax laws would continue to attach to them for an additional 6-years because the family established residency in Japan, known as “Jusho”, 4 years ago when they moved to Okinawa to help Michelle’s mother, who was dying of cancer. During the next 6-years, any gifts from Michael to a U.S. situs ILIT would trigger a Japanese gift tax (55% top tax-rate), thus frustrating the ability to fund the ILIT with standard gifting and loan strategies.


Why It’s Time for the Long-Term Care Conversation

Why It's Time for LTC header

Here’s a list of the most important reasons to talk about long-term care insurance.

  1. Your clients

Clients rely on your expertise and recommendations when it comes to protecting assets and planning for their future. In many cases, your guidance is essential to their peace of mind.

That’s especially true with decisions about long-term care insurance. In fact, 90 percent of consumers surveyed agree their financial advisors should discuss LTC plans with them. (VerstaResearch 2017).

Your clients want you to bring it up – not because aging and health care are as engaging as steady portfolio performance. Rather, they likely know families and colleagues whose lives have been touched by the emotional, physical and financial impact of a health crisis. And your clients want to be prepared.


3 Keys to Producer Success

I am often asked by new and old agents alike, “What does it take to become really successful in this business?”  What I’ve learned over the years is that there is no one thing that, like a magic pill, will guarantee success.  Instead, there are three key things that, when applied consistently, can keep you on track for success and help you avoid failure.

1. Relationships. The relationships you build, nurture and value could be the single most important success strategy in your business – and your personal life.  While we cannot choose our family, we all make choices daily on who our friends are, who our idols are, who we hang out with, and who we choose to marry.  These choices have an immeasurable effect on who we become and how we see ourselves.  Just like the statement, “You are what you eat,” you become like those with whom you choose to associate.  The books you read, the TV shows you watch, the recordings you listen to, all combine like tiny threads to form a rope of bondage – or a lifeline.  Which one do you have?


Table 10-8-6: SWAT Underwriting to The Rescue

SWAT Underwriting to The Rescue

The SWAT Underwriting team at Highland is respected in the industry. Carriers know this team “plays fair” with their case requests and this engenders trust. When a borderline case arises, the carrier will give more consideration to the SWAT team. This is much like basic human nature — people will work harder to find a solution for you when they trust you. In the case study below, learn how this diabetic client benefited from the seasoned SWAT Underwriting team.

Client Profile

  • Client: Male, Age 35, Smoker
  • Health: Insulin-dependent diabetic, Age 14 onset
  • Life Insurance Requested: $4M IUL
  • Initial Offer: Table 10
  • Offer with Credits for Control: Table 8
  • SWAT Intervention Offer: Table 6

Typically, an insurance carrier’s best offer for an applicant who is a smoker and has insulin dependent diabetes is a Table 10. However, in this case, because the diabetes was well controlled, the carrier offered credits which improved rating to a Table 8.

The client did not accept the offer.

Enter SWAT.


Who needs life insurance?

Who needs life insurance? Well, almost everyone. Purchasing life insurance can seem mistakenly complicated and expensive – but it doesn’t have to be.

Some of the most common reasons people buy life insurance are to replace income, pay for funeral expenses, transfer wealth to the next generation, pay off a mortgage, or pass on a business. There are also many reasons people choose not to buy it. Other financial priorities get in the way or people mistakenly think it’s too expensive. If they have life insurance already, they may think they have enough despite life circumstances changing like getting married, having a baby, or buying a new house. Life insurance costs less than most people think. The fact is, a $250,000 term policy only costs, on average, $160/year for a healthy 30 year old.1

This video illustrates the need for life insurance and highlights common misconceptions while emphasizing its affordability. Share this video now with your community and encourage those you know to make an appointment and speak with an advisor today.

1Source: 2019 Insurance Barometer Study, LIMRA and Life Happens

Visit Highland’s social sites — LinkedIn, Facebook, Twitter, Instagram — and share this video with your online community or download it and share directly on your social profile. Spread the word about life insurance and make a difference in the lives of loved ones now.


LIAM: Start the Conversation Now

Life Insurance Awareness Month (LIAM) is the perfect opportunity to reach out to your clients about life insurance. Whether it’s a life event like a new baby or a wedding or divorce, circumstances change and so does the need for life insurance.

Many organizations like “Life Happens” will be flooding social media and advertising channels to remind consumers about the need for life insurance.  Don’t miss the opportunity, while it’s top of mind, to reach out and engage clients and potential clients during Life Insurance Awareness Month.


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